{"id":10832,"date":"2022-05-06T08:00:44","date_gmt":"2022-05-06T13:00:44","guid":{"rendered":"https:\/\/www.cainwatters.com\/digitalblogs\/?p=10832"},"modified":"2022-05-10T11:27:35","modified_gmt":"2022-05-10T16:27:35","slug":"business-loans-interest-rates-rising","status":"publish","type":"post","link":"https:\/\/www.cainwatters.com\/digitalblogs\/business-loans-interest-rates-rising\/","title":{"rendered":"Locking in Interest Rates Before They Rise Even Higher"},"content":{"rendered":"\t\t
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Is now the time to act before the next hike?<\/h2>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
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The era of ultra-cheap money is over. With interest rates on the rise, borrowing money is getting more expensive.<\/p>

The Federal Reserve raised its target federal funds rate by a quarter percentage point in mid-March, the first increase since December 2018. The Fed has laid out a plan for six more rate hikes in 2022, including back-to-back half-point increases in May and June. In total, the Fed\u2019s plan will push the rate on consumer loans 1.9% higher by the end of the year.<\/p>

The federal funds rate is the benchmark interest rate at which banks borrow and lend to one another. While it does not represent the rate consumers pay, it does affect the interest rates we receive on everything from home mortgages to business loans.<\/p>

For dental practice owners, the rising rates have spurred an uptick in loan activity as owners try to lock in current rates before they jump up, says Provide Lending<\/span><\/a> Senior Regional Director of Practice Finance Johnette Green.<\/p>

\u201cLoans for things like new equipment or office renovations that might have been earmarked for the end of the year or 2023 are being pushed up,\u201d says Johnette. \u201cThey\u2019re worried about what they will pay in the future, and they want to take advantage of rates that are still historically very low.\u201d<\/p>

With the buzz of rising interest rates all over the news and reverberating through financial markets, it\u2019s no wonder practice owners are feeling a bit on edge. Many clients are asking our planners if rushing into a business loan to lock in lower rates is a smart idea.<\/p>

The answer, according to Johnette, is not a simple yes or no. Every practice is different, as is every practice owner. That\u2019s why there are three steps in the loan consideration process dentists should know before pulling the trigger on a business loan.<\/p>

STEP ONE: KNOW THE TIMING<\/strong><\/h5>

Standing idly by as interest rates rise can be nerve-wracking, but it\u2019s important to understand the trajectory and timing of the current environment. As previously noted, consumer loan rates are expected to increase another 1.9% by end of 2022. Business loans, however, will move at slower pace.<\/p>

\u201cFor the types of business loans practice owners typically take, the rates were in the high 2% range on a 10-15 year note,\u201d says Johnette. \u201cRight now, they are in the low to mid 3% range, with a swing of about 1% by this time next year.\u201d<\/p>

She expects the current range to hold pat for the next 2-3 months \u2014 just enough time for owners to look at their situation thoughtfully and consider all the options without feeling rushed into making a rash decision.<\/p>

\u201cPractice owners have a little bit of a window here,\u201d says Johnette. \u201cThey don\u2019t have to run out tomorrow and jump into a loan, but they do need to be proactive about looking at the loan options out there and making an informed decision.\u201d<\/p>

Being proactive starts with looking at any existing loans the practice is currently carrying. Practice owners should refresh themselves on the terms of each loan, including current balances, interest rates and maturity dates.<\/p>

\u201cKnowing where you stand now on any loans the practice currently has is key to making the process smoother from the start,\u201d adds Johnette.<\/p>

STEP TWO: KNOW YOUR OPTIONS<\/strong><\/h5>

There are many more loan options on the market today than even a few years ago, meaning dentists don\u2019t have to go the conventional route. It\u2019s always worth the time to do some independent research to educate yourself on loans that might be a good fit for your specific need.<\/p>

Some loan options that have hit the market in recent years include:<\/p>