Interest Rate Rise for Small Businesses

16th November 2017

For small businesses, the effects of the recent interest rate rise will be noticeable in all areas of your business. The following top tips highlight the steps that could be taken to protect your small business.

Plan your finances

  • The recent interest rate rise will affect how small businesses loan money
  • Your consumers will spend less as they borrow less
  • This scenario could mean that your small business will make less sales and less profits
  • By planning your finances in advance, you can highlight your business’s reliance on loans and interest that will be paid
  • Other means of financing your business should be sought
  • Need to assess whether to loan money now or in the future

Plan your cash flow

  • Forecasting cash flow in advance will give you good insight into your financial position
  • Due to the increase in interest charged on loans your cash flow might be affected
  • Keep your expenses to the lowest possible value to protect your cash flow available
  • Assess impact of increase in interest rates to your business before increasing expenses

Business growth strategy

  • Utilise savings to increase your small business’s growth
  • Hold off taking out bigger loans until your financial position is more secure
  • Help your small business grow by decreasing expenses
  • Look at decreasing prices of goods/services if consumer demand decreases to remain competitive

Advantage of Fixed rate loan

  • Fixed rate loan will provide funding without the increase in interest
  • This will also protect you from future interest rate rises
  • This type of loan should be secured in the future in case of further interest rate rises

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