At American Business Credit we pride ourselves on getting our clients the best rates the market and their credit profile allows. Clients currently looking for funding for their new franchise or expansion of an existing business are quite surprised at the “new normal” for interest rates. Many ask: “Is this the right time to start a business?” By Chris Fuller
At American Business Credit we pride ourselves on getting our clients the best rates the market and their credit profile allows. Clients currently looking for funding for their new franchise or expansion of an existing business are quite surprised at the “new normal” for interest rates. Many ask: “Is this the right time to start a business?”
The rates right now are higher in comparison to the last 15 years, but in line with the previous 20 to 30 years. The prime rate, which lenders use to establish a benchmark for lending on a variety of products, is currently 8.5%.
From 1995 to 2000, the prime rate sat between 8%-9% with most years being between 8.5% to 9%.
In January 2001 the prime rate was 9%. Rates were lower for a few years following 2001, but the prime rate was back to 8.25% in 2006 and remained higher until 2008.
There were two financial crises since 2008, which caused the Federal Reserve to aggressively lower rates. The first being the mortgage securities financial crisis of 2008. The second being, a once-in-a-lifetime worldwide pandemic.
The reason this history is important to consider is because rates are higher than the last 10 to 15 years, but historically they are within the averages. The Federal Reserve, in their efforts to keep our economy robust during two crises, has given people the perception that these lower rates created by the Federal Reserve policy were normal rates.
Back to the question we often receive: “Is it a good time to start a business?” The answer is a resounding yes. The rates could come down a point, maybe two, over the next couple of years, but during this period all other startup/franchise costs will likely be more expensive.
We will likely never see the prime rates as low as we saw in the years from 2008 to 2021. Taking out this 13-year period, the rates haven’t been that low since 1955. The bottom line is people have been starting businesses and succeeding with the same, or in some years higher interest rates, for decades.
If your dream is to be your own boss and own a business, don’t delay and try to wait for lower rates. You are only delaying your own success and happiness! Contact us today, we are standing by.
Chris Fuller
Chris Fuller has been involved in business finance for over 25 years. Fuller started out in equipment leasing and then founded American Business Credit in 2006. American Business Credit’s core business has been to assist clients in using unsecured funding options to start and grow their small businesses.