David Brown

With Interest Rates Up, Here’s What You Need to Do

Follow these 5 steps to help your business cope with higher rates.

Published

5 months ago

December 14, 2023

David Brown Instore January 2024 Issue

MOST BUSINESS OWNERS will be aware of the increased cost of borrowing over the last 18 months because of the Fed’s war to combat inflation. The impact of rising interest rates can be substantial, affecting the cost of business operations and potentially squeezing profit margins. For many borrowers, interest rates have effectively doubled, taking thousands of dollars off bottom line profitability. In this challenging environment, it’s crucial for business owners to adopt proactive strategies to combat the effects of increasing rates and maintain financial stability.

Fortunately, there are several actions you can take to help reduce the impact.

Look at your refinancing options. Your current arrangement may not be the best deal you can get, and it could pay to shop around and assess whether there are better options, at more attractive rates, that can meet your needs.

Pay down debt. December and January can be the best time for a business’s cash flow. If you’re confident you have surplus money available, then it could be a good time to reduce your debt by making additional payments.

Look at your fixed vs. floating options. If your current debt is fixed at a lower rate than current market, then it’s good news, especially if there is some time to go on the fixed period. If it’s going to end soon, then you need to decide whether you should revisit that fixed status earlier or wait for it to finish. This will depend on whether you feel rates may rise further or if the top has been reached and rates will either hold or come back down.

Negotiate with lenders. In some cases, lenders may be willing to negotiate terms, especially if you have a history of timely payments and a strong credit profile. You can explore better options without necessarily having to refinance with a new lender. Even if rates are higher, an extension of the loan length can lead to lower regular payments, taking pressure off cash flow.

Accelerate payments. Aside from lump sums, a small increase in your regular payment can have a huge impact over the long term in reducing your total liabilities and payments for the life of the loan.

Facing rising mortgage interest rates requires a strategic and proactive approach from jewelry store owners. Regularly reassessing financial strategies and staying vigilant to market trends will be essential in adapting to the evolving economic environment.

This Third-Generation Jeweler Was Ready for Retirement. He Called Wilkerson

Retirement is never easy, especially when it means the end to a business that was founded in 1884. But for Laura and Sam Sipe, it was time to put their own needs first. They decided to close J.C. Sipe Jewelers, one of Indianapolis’ most trusted names in fine jewelry, and call Wilkerson. “Laura and I decided the conditions were right,” says Sam. Wilkerson handled every detail in their going-out-of-business sale, from marketing to manning the sales floor. “The main goal was to sell our existing inventory that’s all paid for and turn that into cash for our retirement,” says Sam. “It’s been very, very productive.” Would they recommend Wilkerson to other jewelers who want to enjoy their golden years? Absolutely! “Call Wilkerson,” says Laura. “They can help you achieve your goals so you’ll be able to move into retirement comfortably.”