Inflation Worries, Going Beyond the Bank
Erik Anderson – Chief Credit Officer
In a move aimed at countering the fastest pace of inflation in over 40 years, the Federal Reserve hiked interest rates for the third time this year, continuing to make inflation a headline topic.
Inflation can impact businesses in a couple of ways. First, if the cost of materials and labor expenses increase, businesses raise prices to preserve their margins. Second, the Federal Reserve will attempt to balance the equation by raising interest rates. Businesses with existing bank loans suddenly find they are paying more on their installments, while those in need of financing become hesitant to take out loans because of higher rates.
Inflation directly affects banks as well. When interest rates go up, retention becomes a challenge. With businesses seeking financing solutions that fall outside of traditional loans.
The best way to ease inflation worries is to evaluate reliable alternative lending programs available. Traditional banks do not offer programs small businesses need such as equipment leasing, working capital, and more. To find a middle ground, banks can expand their offerings by partnering with reputable indirect lenders that can provide solutions that fit what their clients are seeking.
Alternative equipment financing hedges inflation risk because instead of paying the total cost of equipment up front or with a large down payment in today’s dollars, the stream of payments delays the outlay of funds. In addition, either a lease or finance can provide fixed payments, the finance company absorbs the payment devaluation over time due to inflation and other financial risks.
Northland Capital is a direct alternative lender, not a bank or a broker. We go beyond, offering lending services to match clients with the equipment financing programs they need. We also specialize in building strong partnerships with traditional lending sources to expand their offerings to business clients. Put your inflation worries aside, and contact Northland Capital today.
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