What Lowered Interest Rates Means for Small Businesses

We all know that low-interest rates are usually a good thing but how beneficial can low interest rates be for small businesses? The answer might surprise you! Here are some of the top implications of low-interest rates for small businesses. 

Less Expensive Loans

Most small businesses need a loan sometime in their lifetime. As interest rates decrease, so does the costs of loans. When interest rates are lower, so is the cost of paying back loans. This means that they take less time to pay off. Also, it will be easier to take out new short-term loans to help pay for unexpected expenses.

Low-Interest Rates Can Spur Consumer Spending

When interest rates are low, consumers tend to borrow more money. They then put that money back into the economy by spending more on products and services because they have more disposable income. This is extremely important for small businesses as it can mean that their customers have more money to spend in their business. 

Low-Interest Rates Can Spark Business Growth

Low-interest rates make it more beneficial for a small business to take out new loans to invest in expansion. Capturing a lower interest rate means your loan will cost you less in the long run. You may also be able to refinance some of your outstanding loans during a period of sustained low-interest rates to help stabilize your company’s debt load. Also, when rates are low, you can take the available cash your business generates and place it in high-yield accounts to generate more capital.

In times with low-interest rates, it’s important to take that opportunity to evaluate your business to see if it is the right time to expand and grow your business. At Points West Community Bank, we are always happy to answer any questions you may have. Contact us today!

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