What does the interest rate hike mean for you?
As you might have heard, the Federal Reserve recently announced a rate hike of a quarter-point to 1.25 percent. What does this mean for business owners? Before you get worked up, get the facts.
1) You might benefit from increased loan options. A higher interest rate means lending is more profitable to banks—thus they might increase loan activity.
2) You might be able to put away more. If you’ve planned ahead, you have liquid assets, such as a savings account. As they say, cash is king. The rise in interest rates may give you a chance to earn some interest on your rainy day fund, unlike in recent years.
3) You might increase market share. Higher rates can mean a survival of the fittest. Market conditions can make your more introspective and find new ways of doing things that are actually better for business in the long run. Doing more with less helps spur innovation and keeps you honest. You might even attract a new client or two in the process.
4) You can demand a higher fee. The central bank generally raises interest rates as a measure to keep inflation down. In times of low inflation, there tends to be more capital available to businesses. Consequently, prices for services and products tend to rise. By raising your prices, you are simply following the market trend.
When it comes to anything that might affect your business, it’s important to separate fact from fiction. You may just find that the rate hikes will be a boon to your enterprise! If you have additional questions about managing your small business finances, we’re happy to help! Give us a call at (310) 613-1933