The economy is strong. Before you celebrate, however, you should know one thing: When the economy is doing well, interest rates usually rise.
"The Federal Reserve says that the economy is doing well, so it has raised its key rates recently and is expected to do so again in the near future," says Associated Press (AP) reporter Sarah Skidmore Sell. "The strong economy is great for most businesses, but higher rates will likely increase what it costs for them to borrow."
So, what should your business do in response? If you want to maintain access to cheap capital, the best thing you can do is work on improving your credit.
"Businesses have a few options in an environment of rising interest rates, experts say. The simplest of those is to clean up your personal and business credit," Sell says. "Credit scores are a key factor for lenders when they decide whether to fund a small business. Make your payments on time, use credit only when absolutely necessary, and keep your utilization low. The better the credit score, the better the rates."
Also: You might want to consider making big purchases sooner rather than later.
"Think big picture about your strategic plans. If there are expansions or major investments you need to make, consider the timing in relation to rates and the economy," advises Sell, who says rates are still relatively low, making today a better bet than tomorrow for large investments.
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