In mid-June, the Federal Reserve announced the largest interest rate hike since 1994 in order to fight against this 40-year high inflation that we’re all experiencing. What this means for small business owners is that borrowing for your small business is going to get more expensive. Here are three things you should know about how this interest rate hike affects your small business.
Interest rates are getting higher - and they’re going to continue increasing!
So, we’ve already established that interest rates are getting higher. Currently, the interest rate is going up .75 percentage points. In July, the interest rate is probably going to go up another .50 to .75 percentage points. This is going to bring the total increase in interest rates up by 2.00-2.25 percent.
July is probably not going to be the end of it, either. It could be years until interest rates are back to the point where they are now.
The sooner a small business locks in their interest rate, the lower the interest rate is going to be
With this in mind, if a small business is looking to borrow money in order to grow, the clock is ticking on their ability to get an affordable rate. Banks are of course already adjusting to these higher interest rates, and other lenders like loan crowdfunding portals will soon have to follow suit and adjust in order to meet inflation.
Essentially, if you want to beat the high interest rates that are soon to be everywhere, now is the time to lock in the lowest rate you can get. Interest rates are only going to get higher - that’s a fact. If you wait too long to take out a loan, you’ll be paying a higher interest rate than you would if you borrowed now.
Honeycomb Credit interest rates are fixed, so they won’t be affected by further hikes in interest rates
The good news is that Honeycomb Credit offers loans with fixed-income interest rates. What this means is that when you sign your terms, run a Honeycomb campaign, and receive your money, the interest rate that you’re going to pay back (to those who invested in your Honeycomb campaign) will not change.
Other lenders may have interest rates that “float” or adjust to the market temperature, so at this point they would be going up. Not ours! When you have a loan with Honeycomb, you know that the amount you pay in monthly payments will remain the same, no matter what the Fed does.
So this goes along with our previous point - with interest rates continuing to rise, now is the time to really lock in a lower interest rate. If you take out a loan now instead of waiting, think about how much you’re going to save when the interest rates go up even more!
Also, we should mention that that interest rate you’re paying with Honeycomb doesn’t go to us. That’s right - because it’s a crowdfunded small business loan, the interest that you’re paying back goes directly back to whoever invests in your campaign - so you could be paying back your customers, family, friends, and community. This means you could be part of financially empowering your community, even in potentially bleak economic conditions.
If you’re looking to grow your business with a loan, you do not want to wait until it’s too late
The sad fact is that interest rates are as low as they’re going to be for possibly years - so don’t sit on your hands and wait for them to go up! If you’ve got a project you’ve been wanting to grow your business that you need capital for, don’t wait to take out the loan you need to accomplish it! Find out more about Honeycomb Credit crowdfunded small business loans by filling out the form below.