After more than a year of keeping rates steady, the Federal Reserve is considering a potential rate cut this September, which is welcomed news for many. With this cut on the horizon, business owners face crucial decisions regarding their financing strategies.
According to Keith Wirtz, Chief Investment Officer at Union Savings Bank, the markets have been anticipating this move, with experts predicting a 25-basis point reduction in September, potentially lowering the policy rate to around 5.125%. Wirtz also anticipates that further cuts may occur before the end of the year, possibly bringing rates down to the 4.75% to 5% range.
But what does this mean for businesses?
While some business owners may want to wait for this possible rate cut to explore lending options, USB’s Head of Business Banking, Joe Vereline, says depending on the type of loan, a lower rate isn’t a critical factor.
“While it might be tempting to wait for rates to drop further, the key is to have your financing in place before you need it,” Vereline emphasizes. “Timing is critical, especially in a market where significant rate drops are not guaranteed.”
However, for those currently with variable-rate loans, such as lines of credit, the benefit will be immediate as rates adjust downward.
Overall, both Vereline and Wirtz emphasize that there is rarely a good or bad time to get a loan if a business needs one and that business owners waiting for even lower rates, like the ones seen during the COVID-19 pandemic, should consider reframing their expectations.
“The near-zero interest rates seen during the COVID-19 pandemic were an anomaly.” Wirtz points out, “Today’s rates are closer to historical norms, and we’re unlikely to see those extreme lows again in our lifetime.”
Conclusion
In summary, while a rate reduction might be on the horizon, business owners should weigh the benefits of acting now versus waiting. By consulting with financial experts like Union Savings Bank, you can confidently navigate these decisions, ensuring that your business remains financially resilient.
“We consider ourselves partners when we work with our business customers and their lending needs,” Vereline said. “Along with factoring in current loan rates, we’re here to understand your financial position to help find the right lending solution so you can achieve your goals.”
Need a business loan today? Talk to Joe today by calling 866.650.0720 or learn more about our business lending solutions here.
Disclaimer: This is a general communication being provided for informational purposes only. It is not designed to be a recommendation for any specific investment product, strategy, plan feature, or other purposes. By receiving this communication, you agree with the intended purpose described above. Union Savings Bank and its’ representatives are not suggesting that the recipient or any other person take a specific course of action or any action at all. Prior to making any investment or financial decisions, an investor should seek individualized advice from personal financial, legal, tax, and other professionals that take into account all of the particular facts and circumstances of an investor’s own situation.
Opinions and statements of financial market trends that are based on current market conditions constitute our judgment and are subject to change without notice. We believe the information provided here is reliable but should not be assumed to be accurate or complete. The views and strategies described may not be appropriate for all investors.
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