Results 1 to 2 of 2
Threaded View
-
07-15-2022, 01:34 PM #1
- Join Date
- Mar 2015
- Location
- Boynton Beach
- Posts
- 3,484
Rising Interest Rate Environment
Just a few thoughts on a rising interest rate environment.
Business owners will continue to get squeezed especially if they are using traditional lines of credit to fund day to day working capital needs. Most business owners today have costs exploding due to inflation and supply chain issues. This is having a negative impact on gross margins and net income which reduces availability on tradition lines of credit. Some have had lines reduced or pulled. Adding insult to injury, the business owners suppliers are demanding higher cost and shorter terms and their customers are extending terms. I have seen many cases where customers that were N30 are now N60-N90 at best. This is having a huge impact on working capital. Business owners will need to find alternatives to fund working capital such as asset based lines of credit or factoring.
Finance companies are also impacted by raising interest rates. Finance companies using a discount fee only structure are already starting to get squeezed as most have credit facilities tied to interest rates. For the last several years many finance companies have been aggressive with pricing to win deals and compete with bank owned finance companies that have access to cheap capital. I am already seeing cases where a finance company has asked their client to seek and alternative lender because they are starting to get squeezed. Discount only structures have NO defense in an interest rate rising environment.
There are a LOT of finance companies in the market right now seeking lower cost of capital. A few have sold recently because they were not able to obtain facilities that reduced their cost in comparison to deals they aggressively priced already on their books.Kevin Henry
VP-Business Development
Seacoast Business Funding, a division of Seacoast Bank
561-850-9346
Kevin.Henry@SeacoastBF.com
1880 N Congress Ave., Suite 404
Boynton Beach, FL 33426
Similar Threads
-
How Rising Inflation Rate Continues to Affect the US Economy
By Martinez N in forum Everything elseReplies: 0Last Post: 11-08-2021, 04:19 AM -
Rising interest rate environment.....
By Kevin Henry-Seacoast in forum Everything elseReplies: 1Last Post: 09-18-2018, 08:21 AM -
Interest rate!
By patrickw in forum Merchant Cash AdvanceReplies: 7Last Post: 06-28-2018, 10:45 AM -
Fast and affordable loan at 3% interest rate
By aaida123 in forum Business LoansReplies: 8Last Post: 08-01-2016, 02:11 PM -
LoanMe now offers 0.00% Interest Rate Loans!
By LoanMe in forum PromotionsReplies: 4Last Post: 06-09-2016, 05:33 PM