If you’re a small business owner needing some additional funding, you should seriously consider acting soon before any pending interest rate hikes take effect. A delay could cost you thousands of dollars in higher business financing costs based on recent Federal Reserve moves.
In November, the Federal Reserve raised its benchmark federal-funds rate by 0.75 percentage points, the fourth such increase this year, and said further rate increases were likely. The next Fed meeting is scheduled for December, when analysts expect it to announce yet another rate jump (see chart below).
2022 Federal Open Market Committee’s (FOMC) target federal funds rate or range, change (basis points) and level
| Date | Increase | Decrease | Level (%) |
|---|---|---|---|
| November 3 | 75 | 0 | 3.75-4.00 |
| September 22 | 75 | 0 | 3.00-3.25 |
| July 28 | 75 | 0 | 2.25-2.50 |
| June 16 | 75 | 0 | 1.50-1.75 |
| May 5 | 50 | 0 | 0.75-1.00 |
| March 17 | 25 | 0 | 0.25-0.50 |
For small businesses, those rate increases have led to higher costs on everything from credit cards to variable-rate small business loans to new financing. For example, a $100,000 loan at a 10% rate with a five-year term starting in February would have offered you a total repayment cost of $127,482. On the other hand, if you took a similar loan in November after the rate increases, the total repayment cost would be $138,883 — meaning that your borrowing costs would have risen by $11,401.
If you’re looking to avoid future rate hikes by locking in the current loan rates, First Union has various suitable business loan products for just about any use and/or purpose you may have.
We will work with you as you navigate the application process to determine the best course. You get a dedicated advisor available to answer any questions, and with our speedy turnover times, you can be funded in as little as two days. Call us at 863-825-5626 today, and we can help figure out which product might be best for you!