How To Prepare Your Business For Rising Interest Rates
Navigating your own personal financial world is a tough task. Not to mention keeping your business’s finances in order being an exponentially more complicated endeavor.
What about the changing financial world around you and your business? When the federal government changes its approach, it affects many different aspects of overall business. Especially when the Federal Reserve raises interest rates, as it is projected to do three times in 2022. The first of these interest rate increases could come in the next two months.
In addition, the annual inflation rate increase for 2022 is larger than any single year since the early 1980s, setting the stage for a year with heavy inflation being fought against with interest rates increasing. These highly volatile developments in the national financial landscape can be a confusing and challenging time for what businesses and business owners need to do to thrive in the coming year. Historically, that means it’s time for business owners to act.
Locking In At Lower Rates
Businesses thinking about adding a piece of equipment such as a semi-trailer to speed up distribution, a new machine to increase productivity in your factory or new kitchen equipment to keep your restaurant bringing in customers should consider locking in to a financing or leasing agreement sooner rather than later to keep the lower interest rates than what could appear in March.
These savings across the span of a year can help your business free up other working capital that you may need for the next equipment purchase or other business venture.
Don’t Forget About Inflation
Despite the best efforts of the Fed and raising the interest rate, inflation will continue to add pressure to the financial landscape even with the higher interest rates. Essentially, with continued inflation looming as the year goes on, the price tag for your leased or financed equipment will be lower now than it will be at the end of 2022.