• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar
  • Skip to footer
  • Facebook
  • Instagram
  • LinkedIn
  • Twitter
  • YouTube
Big Ideas for Small Business logo

Barbara Weltman

Big Ideas for Small Business, Inc.

Whitepaper download

Subscribe and download our eBook, "150+ Tax Deductions for Small Business A to Z."

This field is hidden when viewing the form
Get the:

  • Home
  • About Us
  • Big Ideas For Your Business
    • Idea Of The Day ®
    • SMB Legal
    • SMB Taxes
    • SMB Financial
    • Small Business
    • Newsletter Archive
  • Services
  • Books
  • Blog
  • Multimedia
    • Videos
    • Radio Shows/Podcasts
  • Be a Guest Blogger

Rising Interest Rates and Your Business

August 1, 2014 / By Barbara Weltman

The Federal Reserve has indicated that rates will be rising, albeit very slowly. What do rising interest rates mean for you?

Borrowing
The most obvious and immediate impact that rising rates have is an increased cost of borrowing. If you have a fixed-rate loan, you are not affected by any change in rates. But if you have a line of credit or other adjustable-rate loan, when banks raise their rates, it will cost you.

What will higher rates for borrowing mean to you? Will you ditch a new project that would have required financing? Will you raise your prices to cover the additional cost of your current debt service? These are the kinds of questions you should be asking yourself now.

Sales
As interest rates and borrowing costs rise, consumers may be personally affected (e.g., they’ll be paying more for new car loans, etc.), leaving them less to spend. This may adversely impact your sales. Be sensitive to this situation and carefully monitor your pricing.

Also consider your receivables policy. Depending on your billing process, you could be, essentially, acting as a banker for your customers. You may want to switch to a requirement of immediate payment (via credit card, PayPal, etc.) rather than agreeing to invoice them for the goods or services you provide.

Creating your own fund
If you anticipate a future need for money, plan ahead so you can lessen or eliminate the need to borrow. You can do this by retaining earnings rather than distributing them to owners.

If your business is a C corporation, there are limits on how much you can retain without incurring an accumulated earnings penalty. There’s a basic amount of $250,000 ($150,000 for personal service corporations) that can be accumulated with impunity. If you want to go higher, you’ll need a good business reason for doing so (e.g., a future expansion) — and you’ll have to document this reason in corporate minutes.

Conclusion
Work with your CPA and any other financial advisor to adjust to the business environment brought by rising interest rates.

Primary Sidebar

Categories

  • General Business (493)
  • Guest Blog (106)
  • Homepage (21)
  • Small Business (981)
  • SMB Financial (320)
  • SMB Legal (64)
  • SMB Taxes (324)

Barbara’s Recent Posts

  • Moms Know Best: Lessons for Entrepreneurs May 8, 2025
  • Mental Health Challenges in the Workplace May 6, 2025
  • Let’s Celebrate Small Business! May 1, 2025
  • Scaling Your Business: Adding a New State Location April 29, 2025
  • What to Do about Waste Management in Your Warehouse April 28, 2025
  • Restrooms: Not Front Office but Just as Important April 25, 2025
  • Eye Strain: A Workplace Problem to Address April 24, 2025
  • What to Do When You Can’t Get Approved for a Business Loan April 23, 2025
  • A Good Time to Review Your Company’s Driving Policy April 22, 2025
  • Learning New Ways for Spring Cleaning Your Business April 17, 2025
  • How to Build Anticipation for an Upcoming Product Release April 16, 2025
  • Proposals for Better Tax Rules for Small Businesses April 15, 2025
Awarded Top 100 Small Business Blog medal (link will open in a new window or tab)
Marquis Who's Who 2023 Badge
Top Small Business Blogs (Link will open in a new window or tab.)
8 Financial blogs small business Owners Need to Read. Invoice home.  (link will open in a new window or tab)
Best Small Business Blog, Expertido.org
Top 50 Small Business Blogs 2018
Best Small Business Blogs
BizHumm Top 100 Business Blog Award to Barbara Weltman
FitsSmallBusiness.com: Award for Best Small Business Blog 2017 (link will open in a new window or tab)
FitsSmallBusiness.com: Award for Best Small Business Blog 2016 (link will open in a new window or tab)

Footer

Big Ideas for Small Business logo

Small business ideas, business tax news and small business consulting from Barbara Weltman to provide business owners with the information they need to succeed. Visit our small business blog, Idea of The Day®, small business books and articles on small business taxes, small business finance and small business legal advice.

Contact Us

[email protected]

(772) 492-9593

gacor maxwin situs slot thailand terpercaya situs slot gacor situs gacor akun pro thailand slot bandar togel terpercaya

Latest Tweets

bigideas4sb Big Ideas for Small Business® @bigideas4sb ·
February 17

The Art and Science of Building: Exploring the Intersection of Architectural and Engineering Design https://bit.ly/40Qt0P6 #smallbusiness #design

Reply on Twitter 1891632577175253217 Retweet on Twitter 1891632577175253217 Like on Twitter 1891632577175253217 3 Twitter 1891632577175253217
bigideas4sb Big Ideas for Small Business® @bigideas4sb ·
February 17

4 Crucial Errors in Your Compliance Approach to Hiring - HR Daily Advisor https://bit.ly/4jQCcvQ #smallbusiness #hiring #compliance

Reply on Twitter 1891586740189585747 Retweet on Twitter 1891586740189585747 Like on Twitter 1891586740189585747 Twitter 1891586740189585747
bigideas4sb Big Ideas for Small Business® @bigideas4sb ·
February 17

Is Romance Back in the Office? Is this a good or bad thing?https://bit.ly/3D1Hx2x #smallbusiness #ValentinesDay #workplace #officepolicy

Reply on Twitter 1891567067897168123 Retweet on Twitter 1891567067897168123 Like on Twitter 1891567067897168123 1 Twitter 1891567067897168123
Load More

Copyright © 2008–2025 Big Ideas for Small Business, Inc  |  Designed by Hudson Fusion

  • Privacy Policy
  • Sitemap