SAN FRANCISCO (8/14/15)--Small businesses curious about the effect of the upcoming Federal Reserve’s rate hike may glean some information from a CUNA economic expert featured in NerdWallet.
The personal finance website tapped CUNA Senior Economist Perc Pineda for “3 Ways Small-Business Owners Can Prepare for an Interest Rate Hike.”
The Fed will likely raise the federal funds rate to 0.5% in September, Pineda told NerdWallet, with a potential to reach 1.75% by next year.
One tip is for a small-business owner to negotiate a fixed-rate loan now. “If you could lock into a long-term fixed rate today or in the next month, as opposed to a variable rate, you’d actually be in a good position,” Pineda said, “because now we know higher interest rates are actually inevitable.”
Businesses that have high-cost, variable-rate debt that is tied to the prime rate may want to pay it off or refinance the loans before the funds become more costly.
The article also suggested extra cash could be transferred to an interest-bearing account to take advantage of higher yields on savings that result from a rate hike.