Unlocking Opportunities: Navigating Interest Rates in Business Expansion

Finance Funeral Industry News GROW June 5, 2024
Live Oak Bank Interest Rates

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Unlocking Opportunities: Navigating Interest Rates in Business Expansion

In the fast-paced world of business expansion and acquisitions, navigating the decision to move forward can be tricky. Fluctuating interest rates add another layer of complexity. This article will shed light on how these rates impact your financial choices and equip you with the knowledge to make strategic decisions for your business growth.

Understanding Interest Rates: A Historical Overview

Interest rates have recently become a central topic due to dramatic shifts. Rates hit historic lows in 2020-2021, dropping below 3% due to the Federal Reserve’s response to the pandemic.1 Interest rates then rose throughout 2023 to combat inflation but have remained stable since July 2023 after the period of significant increases.1 While today’s interest rates have risen and are higher than recent lows, they remain within a historical range, especially compared to the dramatic swings of the past, such as the early 1980s, which saw rates skyrocket over 18%.1

Navigating Uncertainty: A Calculated Approach

While interest rate fluctuations can introduce uncertainty, a well-calculated approach to business growth is key. Minimizing personal debt remains wise to avoid financial strain, but strategically leveraging debt can be advantageous for your business. The potential rewards of a successful acquisition or expansion, like increased profits, can outweigh the downside of the increased cost of capital. This is where a seasoned funeral lending expert can provide a holistic view and help you make informed decisions tailored to your specific business goals.

Evaluating the Current Climate

In the current market, interest rates have stabilized, prompting a resurgence in expansion and acquisition activities. Businesses are cautiously optimistic, leveraging lower variable rate options to capitalize on favorable market conditions. In fact, according to Live Oak Bank’s Voice of the Customer Study, 55% of customers are very likely or somewhat likely to borrow within the next 3.5 years to grow their business.2 However, assessing your cash flow and the potential impact of future rate fluctuations on your business operations is crucial.

Seizing Opportunities: Be Ready, Not Reactive

Timing is key when contemplating expansion or acquisition. It’s impossible to predict the perfect time or rate. Still, businesses can be prepared to seize opportunities when they arise and mitigate risk by planning for various scenarios and stress-testing their finances.  A well-defined strategy and ample liquidity will ultimately position funeral businesses for long-term success, not just a fleeting market advantage.

Your Partner for Success

At Live Oak Bank, we understand the importance of partnering with funeral businesses to ensure their financial well-being. Our approach goes beyond mere transactions, focusing on building long-term relationships and crafting tailored solutions to support your growth objectives. With a non-commission-based environment and a commitment to understanding your unique needs, we’re here to help you confidently navigate the complexities of business expansion.

Embracing the Future

In conclusion, while interest rates may fluctuate, opportunities for business growth abound for those who are prepared and strategic in their approach. By staying informed, stress-testing your finances, and partnering with a trusted advisor, you can unlock the potential for success and seize opportunities that may not come again. Don’t let fear hold you back—embrace the future with confidence and vision.

As you embark on your journey of business expansion, remember that Live Oak Bank is here to support you every step of the way. Contact us today to explore how we can help you turn your dreams into reality.

To connect with Live Oak’s funeral lending team, visit liveoakbank.com/funeral.

  1. Board of Governors of the Federal Reserve System (US). (2024). Effective Federal Funds Rate [EFFR]. Retrieved from FRED, Federal Reserve Bank of St. Louis; https://fred.stlouisfed.org/series/FEDFUNDS
  2. Live Oak 2023 Voice of the Customer Study (Powered by Barlow Research): https://info.liveoakbank.com/voice-of-the-customer