By Philip James
NDBT Business Development Officer

Managing through current rates

A small business owner recently approached with the question of whether the business could use the current market conditions to its’ advantage. As we explored options, refinancing their current debt made little sense, as rates are appreciably higher than when the debt was acquired. However, the time period following the debt acquisition allowed the company to experience significant growth and an enhanced cash flow.


The rising rate environment we are experiencing in our economy is providing unique challenges and advantages for small businesses. For example, while borrowing becomes more expensive, rate increases also represent the best opportunity in a decade to retrieve significant yield on deposit accounts. This means every available excess dollar can be utilized towards high yield and low risk returns that may only be available for a brief time. The small business owner in this instance was able to take advantage of this opportunity with the excess cash flow experienced in their growth period.

Your business may also benefit by shortening your Cash Conversion Cycle through Treasury Management products. Utilizing these tools enables you to convert inventory into cash more quickly. This enhanced liquidity, in turn, can be invested. As the cost of debt also increases, a lender that has your best interest in mind can assist you in prudently managing debt.

A true relationship focused banker can find creative approaches to ensure your business is set up for success. It is not always as cut and dry as simply assuming the numbers on a rate sheet are your only alternative. Whether your business is in a cycle that requires borrowing or you are better served finding return on excess funds, there has never been a better time to have a trusted advisor walking alongside your enterprise.