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How will the low lending rates affect your business? | |
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TeamBiz Editor | Posted Apr 23, 2009, 12:56pm As you probably already know, the Bank of Canada cut the benchmark-lending rate to 0.25% as of April 21, and it says it will probably stay there until next year. Soon after the announcement, some banks lowered their lending rates to 2.25%. Cheap money should be good for business... What do you think? Do you intend to borrow in the next months to develop your business? How will these low rates affect you? |
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Alex Bucataru | Posted Apr 24, 2009, 1:14pm This is definitely good for existing lines of credit and loans whose interest rates are tied to prime. And with rates forecast to stay at this level for the rest of the year, it is a powerful advantage for businesses that already have enough room in their revolving credit accounts.
For businesses trying to get new credit, it's more of a theoretic advantage. The main issue there is availability of credit. A low rate won't do you any good if you can't get the loan.
Fortunately, we are in the first category. If our sales were to show any signs of weakness, and we didn't have the cash, I wouldn't hesitate to use the credit tools at our disposal to boost our marketing. At these rates, the return on investment doesn't take a significant hit.
It would also be interesting to hear from people who are currently or have been recently looking for new credit, about how easy or difficult it is to get it.
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