The direct impact of raising interest rates by the Federal Reserve will be the increased cost to borrow. One of the few tools available to our government to combat inflation is increasing interest rates. The cost for credit, which many businesses rely on to keep their businesses functioning, have increased and will continue to increase as interest rates continue to climb.
Not many segments of our society have been spared by inflation. Economists are pointing to several factors that have attributed to the highest inflation seen in decades resulting from government spending to combat COVID, supply chain issues related to COVID, tight labor markets, shortage of housing supply and the war in Ukraine driving up costs of gas and food to name a few.
Businesses often rely on credit to manage cash flow, which sometimes includes paying their employees and vendors to purchase equipment or inventory. Years of easy money policies have made businesses ever more dependent on credit.
If you are a business owner that relies on credit or a business owner that is considering locking in credit before rates climb even higher, reach out to the attorneys at Outside Legal Counsel LLP. We can help review your financing and loan agreements so that you can make better decisions about credit and the impact increased costs of credit will have on your business.
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