In September, the Federal Reserve raised the interest rate for the third time this year to between 2 percent and 2.25 percent. Officials expect it rise again in December, and at least two more times in 2019.

See, the Fed shifts the rates whenever it wants to trigger a change in the economy. The hikes are a good sign that the central banks have confidence in the economy. The Fed plans to raise the rates again to a neutral level that seeks to neither spur nor slow economic growth. As the economy expands, unemployment rates drop, and inflation running at the Fed’s 2 percent target, the Fed has slowly raised rates to prevent the risk of unsustainable growth that could rear its ugly head as financial bubbles or greater inflation rates.

A Bit of History About Interest Rates

Following the Great Recession, the Fed’s held interest rates near zero due to a lack of economic growth in the United States and abroad and to support the flow of cash to small entrepreneurs in need of capital to build up business. The Fed first began increasing rates after the crisis back in December 2015.

During this time, anyone who had good credit were able to take advantage of historically low rates whenever they borrowed money. That, however, did nothing for those with no credit or poor credit, and because banks were still recovering, they were in no shape to start lending money when yields did not reflect the risk.

Moves to Make Now

With new interest rate hikes looming, it is best to borrow now, especially if you operate a high-risk business. Merchants classified as high risk already get hit with pricier rates and fees because they are more susceptible to chargebacks. Take advantage of the current rates by applying for a high risk business loan now.

When the Fed raises rates, banks do not have the same incentives to lend to consumers or other entities. They do not want to lend because they earn more money to keep their funds in reserves.

So, if the central banks continue to raise interest rates as they have projected, you cannot only expect to pay more but you likely will have less opportunities to borrow money.

With all things being equal, now is the time to borrow if you need the money. Why wait and see what happens, when you know what the borrowing landscape looks like right now.

The Final Say

Small businesses that expect their organizations to grow and thrive next year will be setting themselves up for success if they borrow now before the rates shift even higher. If for some reason something bad happens and the economy goes south, you could be missing an opportunity to borrow again in the near future.

If you are in need of a lump sum of cash to expand, try out a new product, or add to your workforce, then, get the capital you need by applying for a high risk business loan. The infusion of capital will allow you to take your business to the next level.

When you are ready, consider applying for a high risk business loan from First American Merchant (FAM). It can help your business move forward with the right funding solution. It offers a quick and easy online application and solutions for all types of businesses. Additionally, most applicants are approved quickly.

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