On September 21, 2022, the Federal Reserve raised its federal funds target range to 3% to 3.25%. That historical figure helps explain the borrowing concerns businesses faced when this article first appeared.
Higher market rates can make new borrowing more expensive and affect customer spending. The impact on existing financing depends on the agreement.
Check fixed and variable rates
A fixed interest rate stays the same for its agreed period. A variable rate can change with its benchmark. Check when the rate resets and how that affects your payment.
Compare upcoming payments with expected cash receipts. If the budget looks tight, contact the provider before a payment is missed. Paying down debt may reduce interest costs, but leave enough cash for operating expenses.
Watch sales as well as borrowing costs
Customers facing higher borrowing costs may postpone purchases. Use recent orders, collections, and supplier quotes to update your budget, then check whether any proposed financing remains affordable during a slower month.
