If you’re hold a short-term bank CD, the idea of having interest rates rise may appeal to you. However, when business loan interest rates rise and you’re on the other end trying to borrow, then it is not so much fun. Therein lies the balancing act between lenders and borrowers. Lenders want to make the most off their investment by lending at higher rates while borrowers want to pay as little as possible for borrowing money, thus hoping for the lowest rates. When the Federal Reserves kicks in and has to raise rates, it can impact other sources of lending causing them to rise to too. Right now, some interest rates are rising, and that’s why you may want to borrow now and set your loan rate terms as the best strategy to hold down the cost of future money lending.
Timing is Every Thing
Borrowing when rates are low, or at least setting aside some line of credit with a low rate, is the best strategy to keep rates low. You borrow early, when the rates are low and you wait until you need it later, without having to reapply later when the rates are high. The longer you can have for the term of that agreement the better, especially in a situation where rates are forecasted to rise as they are now.
Borrow From Unconventional Sources
Peer-to-peer lending sites, like Prosper.com, will allow you to borrow money often at a better rate than a private lender. Anytime you can go for a source that either keeps the rates down, due to a special program, or is a community lending resource, you’ll get a better rate – even when rates are higher elsewhere. Leave no stone unturned when looking for low business rates and what you come up with may surprise you.
