The Waiting Game

When

By Josh Villa

percent as of July 2023. Where rates are today versus where they were even 18 months ago can impact your business’s cash flow.

Understanding the cost of funds is vital to planning your expansion. How much will it cost to expand, including financing costs? How much will it cost you not to expand due to lost potential revenue growth or increased efficiencies?

Loans like the Small Business Administration (SBA) 7a program are an excellent option for businesses in this climate conventional long-term loan today. Rates are at their highest in almost 20 years, and you would be stuck paying excessive interest and then paying for a new origination fee to refinance if and when interest rates go down. It’s a win-win when you get to save time and money.

There are also plenty of short-term loan options on the market. They provide quick funds – but at a high cost. Not only do these programs typically carry higher interest rates than conventional or SBA

"The Waiting is the Hardest Part,” according to the late, great Tom Petty. And now, more than ever, that statement applies to small businesses across the country.

Interest rates are rising, and some financial institutions are scaling back lending due to uncertainty in the market and tightening liquidity. Small business owners are asking themselves, “Do I wait to take the loan to expand my business? After all, ‘The waiting is the hardest part!’”

The answer depends. The answer might be no if you see warning signs in your industry. However, if the answer is yes or maybe, take the time to consider the following thoughts.

Rates are high. The average Historical Prime Rate is 6.8 percent, and we are at 8.25 because they are long-term (generally 10 years if real estate is not included) and can help purchase equipment, fund startup costs, and provide working capital. The 10-year term notably impacts your ability to preserve cash flow as a business grows. These long-term 10-year SBA 7a loans also carry no pre-payment penalty, so you can save money by paying it off early.

Keep in mind that these loans are variable rate. That may sound risky in this environment, but consider what happens if your business locks in on a loans, but they also generally have short repayment terms, which can limit your cash flow for continued growth.

For businesses waiting before expanding, now is a great time to help grow that cash position more quickly through Certificates of Deposit (CD) with a set term, or a money market if you prefer more liquid funds. Many credit unions and banks have competitive deposit opportunities.

Despite the competitive deposit rates on the market, many small businesses are hoping to see loan interest rates “Free Fallin’,” but it looks like we may need to be patient and carefully evaluate the best path forward.

Suite new font!

The default font for Microsoft productivity apps such as Word and Outlook has been Calibri since 2007. That’s about to change, thanks to testing done by the company. In 2021, Microsoft began testing five new fonts for user feedback. The update stems from a need to keep applications looking fresh, as Office products bring in nearly 24 percent of Microsoft’s revenue. The font currently known as Bierstadt, which was designed by font designer Steve Matteson in 2019, rose to the top. The name Bierstadt comes from the name of a mountain in Colorado, and also means “beer city” in German. As some feedback said that users didn’t take the name seriously, it is being renamed Aptos, after an unincorporated town in Santa Cruz County, California. Nice font, dude. Source: CNBC

Hands up!

Amazon will soon be rolling out biometric technology at Whole Foods stores that allows shoppers to pay for items by scanning the palms of their hands. Shoppers will have to connect a store card to their palm, but then paying for goods will be as simple as a hand wave. The technology, dubbed Amazon One, debuted in Amazon Go stores, with over 3 million uses as of July 2023. The future, it turns out, is in the palm of your hand. Source: CNBC