In an effort to curb the inflation that has been hitting the country hard, the Federal Reserve began raising its key interest rates in fall 2022, with no end in sight. As a result, the debt load for consumers and businesses is likely to increase as loans, mortgages, and credit cards get more expensive.

While small businesses have seen their share of challenges over the past few years, this adds to the concerns they will continue to face, particularly if they are already struggling to maintain profitability. Businesses relying on loans, credit cards, and lines of credit can still do so, but they may need to take rates into more consideration and make some changes to how they are financing their businesses in order to feel less of a blow from rate hikes.

1. Review Your Current Loan Rates

If you have loans with variable rates, it might be time to revisit and see what your options are to get rates that are more favorable.

"If you’ve been financing your business with variable-rate loans over the past few years—congratulations!" says Ryan Kelly at Forbes.1 "You’ve done a great job keeping your interest expense low, as variable-rate loans have been close to zero depending on the type of financing you obtained. But now is the time to dump these variable-rate loans and switch into fixed-rate options if at all possible. Variable-rate loans reset rapidly and often violently in reaction to rising market rates, so you’ll want to jettison that risk before the costs eat up your company’s free cash flow."

2. Consolidate or Refinance Your Debt

Explore options for refinancing or consolidating the debt that you have with high interest rates and those with rates that are likely to jump soon.

"Rising interest rates mean credit card and mortgage rates increase," says Donna Fuscaldo at "An effective way to immediately save money is to refinance an expensive debt. That is particularly true if the debt is variable. Many small business lenders enable borrowers to use the loan proceeds to refinance expensive debt. If refinancing, consider keeping the length of the loan the same – or shorter – to avoid paying more interest in the end."

Check out Nevada State Banks' Debt Consolidation Calculator as well as small business loan options3, and get in touch to discuss the best way forward.

3. Finance Before Rates Climb Higher

If you intend to look for new financing, it might be best to act quickly before rates continue to climb. If you're planning on purchasing new real estate, equipment, etc., you may be able to save your business a great deal of money by locking in a rate in the near term.

4. Cut Costs

Consider cutting business costs to help offset the money your business will pay due to the rate hike. Look for ways to save on supplies and production. Look for free and cheaper alternatives on software and services. Find a space with cheaper rent or consider a fully remote office if feasible. Pay off debt more quickly. Always review your expenses regularly.

5. Tend to Your Personal Finances

You can help your business by optimizing your personal finances in light of the rate hike. As a consumer, you will face many of the same issues as your business will. Interest rates on anything you don't have a fixed rate on can cause you some personal financial discomfort. Get your debt and expenses under control, and you may be able to take a smaller salary to save your business some cash.

Now is a good time to carefully review all of your personal and business finances and determine what changes can be made so that you are able to prepare for further interest rate hikes. Speak with your banker, who will be able to provide you with all the assistance that you need on both fronts, to help ensure you are meeting the challenges ahead in a responsible and effective way.




3. Subject to credit approval. Terms and conditions apply. See a banker for details.


The information provided is presented for general informational purposes only and does not constitute tax, legal or business advice. Any views expressed in this article may not necessarily be those of Nevada State Bank. Nevada State Bank is a division of Zions Bancorporation, N.A. Member FDIC