Fixed, Long-Term Interest Rates Protects Against Rate Hikes

Posted: Updated:
Wojtowicz founded Indianapolis-based Cambridge Capital Management Corp. in 1983. Wojtowicz founded Indianapolis-based Cambridge Capital Management Corp. in 1983.

A Hoosier small-business owner recently told his banker that, “Interest rates are as low as they ever will be” in the foreseeable future, and he wanted to get a loan with a “friendly” rate.

The Fed made that official recently when it indicated  another quarter-percent rate hike will likely occur in December.  Most pundits expect there to be  three more rate hikes in 2019.

Small-business owners are under pressure to act if they are considering the purchase of a major, fixed asset.

People who own small businesses must make major decisions all the time. Decisions on marketing, launching a new product, whom to hire — or not — loom every day. Among the most significant decisions  is whether and when to buy major fixed assets such as a building or heavy machinery. Fixed assets potentially will influence a company’s success for years — even decades — in the future. Of course, they must be financed and paid for over a long time.

Even though financing is a crucial “must have” for almost any business, it’s a major commitment for an owner to add a monthly loan repayment to his or her budget. The repayment will be less of a burden if it a known amount that will not change over time. Locking in a low interest rate over a long repayment period is key.

So, it is time for a small-business owner to go shopping for an affordable loan. A local bank is a good place to start. Banks, large and small alike, compete to make business loans, and loan repayments are a crucial component of a bank’s income. But while large businesses have lots of options to arrange long-term fixed-rate financing, this can be much more difficult for smaller businesses. Those small customers may be most vulnerable and need to catch a break. And they also provide jobs and incomes for a large segment of their local populations.

Bankers can access so-called “alternative” financing that can help a small business. For example, SBA 504 financing can offer loans at very low  commercial rates and lock in that rate for 10 years, 20 years, even as long as 25 years!

These are the types of programs many small-business owners miss. They are busy running their business and handling the responsibilities that come with it; sales, employee relations, meeting payroll, upkeep on property, locating and buying inventory. Any small-business owner will tell you that running a company is a full-time job, with lots of overtime.

Small business owners rely on their banking relationships to search out affordable lending programs. And bankers, too, have a difficult job of keeping up-to-speed on financing options that will most help their clients.

The message for people who own small businesses is: it’s probably best to act now if you are adding a major, fixed asset. But do not be discouraged. You can get help. Assistance programs are available. Your banker should be able to enlighten you. And if one bank can’t, there is another on the next corner.

Interest rates will almost surely rise for the next few years. Locking in a lower rate now will save you, as a small-business owner, thousands of dollars over the life of your loan. And give you a consistent figure in your monthly budget.

Jean Wojtowicz is president of Cambridge Capital Management Corp.

  • Perspectives

    • Unmasking Accounting Data: Moving from Reporting to Being Strategic

      What story do our financial statements tell us this month and year, to date? This was the question that was always directed at us by a former manager.  He believed that financial statements tell the story of how a business is run and the direction it’s going. Most businesses publish their profit and loss statements, and balance sheets every month. These are the standard reports included in most reporting packages. Usually, the management tends to believe...


Company Name:
Confirm Email:
INside Edge
Morning Briefing
BigWigs & New Gigs
Life Sciences Indiana
Indiana Connections


  • Most Popular Stories

    • Apartment Building Development Coming to Rushville

      A Knightstown company has announced plans to build four new apartment buildings in a $5.25 million development in Rushville. Villa Buildings will be built by KDC Investments, Inc on West 16th Street in Rushville.

    • The Mystery of Cancer in Firefighters: Two Indiana Researchers Uncover Clues

      There’s a lot of conjecture about cancer in the world of firefighting, but a crescendo of anecdotal—and scientific—evidence is driving two Indiana researchers to search for answers. 

    • BraunAbility Moving Global HQ to Carmel

      A manufacturer of wheelchair vehicles and wheelchair lifts in Pulaski County has announced plans to relocate its global headquarters to Carmel. BraunAbility says it will invest $7.5 million to move its HQ to the Lakeside Green Business Center and construct a new Research & Development and Technology Center. The Indiana Economic Development Corp. says the move will create up to 70 jobs in Hamilton County. The company says the investment will also boost its existing...

    • Indy Eleven Rallies For State Stadium Support

      Indy Eleven leadership, players and fans Thursday rallied at the Statehouse for support of a measure creating a public-private partnership to help fund a $150 million soccer stadium. Lawmakers are considering a measure that would allow the team to work with city leaders for two years on development plans for the venue, which would be funded by developer-backed bonds. In an interview with Inside INdiana Business Reporter Mary-Rachel Redman, team owner Ersal Ozdemir said the...

    • Emplify Celebrates Record Growth

      Fishers-based Emplify is touting a record year of sales and hiring growth in 2018. The company, which focuses on employee engagement measurement software, secured $7.5 million in growth investment and says it saw a 156 percent increase in sales last year.