There is a point where interest rates are lower or higher depending on the markets. When it comes to getting business loans, it is important to plan the best time to procure a business loan when there are the lowest interest rates for the loan’s payback.
It is important to look for the point when loan fees are low, contract installments decay, organizations can bear to grow because the expense of their capital is low, buyers are urged to purchase on layaway, and speculators are struggling to discover high return ventures will, in general, put resources into new companies.
Low loan fees support shopper spending. Purchasers exploit low financing costs by purchasing houses, vehicles, and other expensive things. The intrigue installments they should make on advances to purchase such things will below, and their complete installments are more moderate.
At the point when the lodging market is dynamic, work in the development, assembling, and administrations parts rises, since contractual workers employ laborers, purchase building materials and apparatuses; gardeners and nurseries experience blasting business, and new mortgage holders burn through cash on things like furnishings and inside decorators.
When the car market is dynamic, vendors employ more sales reps, and producers enlist more specialists and purchase more steel, plastics, glass, and parts.
It seems that the president of the European Central Bank has decided to “catch the bull by the horns” in the field of European markets. Thus, last Wednesday, he gave a new respite to the productive and financial fabric after announcing the ECB’s decision to lower interest rates to a minimum of 0.05%, a measure aimed at improving demand and combating deflation.
But, to what extent can this affect your company or business? A priori, these types of initiatives contribute to improving credit and making money flow more easily. However, the latest data reveals that, despite a slight improvement, financing remains one of the biggest obstacles for SMEs.
Some freelancers, such as ATA, denounce that this measure will not positively affect the access to credit of freelancers. According to its president, the initiative can positively reverse an increase in consumption, although it will not help ” improve credit for the self-employed.”
This skepticism regarding the fluidity of credit is backed by memory: an unchecked increase in bank margins has traditionally absorbed the historical interest rate drops.
Thus, financing has continued to be unattainable for many families and small businesses. The challenge now lies in the fact that these measures will be transferred to the retail market and the commercial networks of the banks.
Interest rates for SMEs remain higher than in Europe
And even though the cost of credit to SMEs marks a new historical low since 2011 (that is, the interest rate that banks apply for loans of less than one million euros, which are the ones usually requested by small and medium-sized companies and the self-employed), down to 4.58% in July compared to 4.59 the previous month, a level not seen since the summer of three years ago, access to financing is still twice as expensive in the US than in the rest of the big countries of the Eurozone.
Thus, although the interest rate for SMEs in the European average rose slightly in July to reach an average of 3.60% compared to 3.59 in June, some countries such as France barely pay 2.24%, according to the European Central Bank data.
The increase in consumption
The measure will increase consumption and, therefore, relief for all those small businesses and businesses that have seen how their sales have gradually collapsed since the beginning of the crisis.
Where will this increase in consumption come from? With the lowering of the interest rate, consumers and families will have more liquid thanks to lowering the mortgages and the few financial benefits that the savings will have.
Finally, and although the drop in interest rates and the price of money involves the euro’s devaluation, it becomes very positive for those companies whose business is focused abroad, with the improvement of exports.
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