Which Opportunities Can Small Business Owners Exploit When Interest Rates Go Down?

Among the many issues that the pandemic presented Canadian business owners was a surge in inflation. Between 2020 and 2021, at the height of COVID-19 restrictions, the Bank of Canada’s interest rate reached as low as less than 1%. However, by mid-2022, that soared to 8%. As of April 2023, the interest rate was set at 5% and has remained unchanged ever since. As per an announcement made on January 24, 2024, the Bank of Canada is keeping its interest rate at 5%.

The recent declaration presents opportunities for small business owners all over Canada. In what ways can you exploit lower interest rates to benefit your company?

Unlock your business potential with a CELOC.

A Commercial Equity Line of Credit (CELOC) allows your business to access funds similar to that of a credit card. Remember that when interest rates decrease, your property equity rises. This enables you to infuse additional funds into your business to generate growth. We’re talking about expanding, renovating, buying new equipment, ordering new inventory or launching a new advertising campaign.  

“A commercial equity line of credit allows you to withdraw cash in whatever amounts you want, up to a specific monthly credit limit,” explains Bryan Daly of Loans Canada, “You’re then left with monthly balance payments, with the option of making minimum or partial payments and you only need to pay interest on what you owe.”  

Refinance your debt.

Why not take advantage of lower interest rates by trying to reduce the interest rates on your outstanding debts? Contact your creditors to see if there are any new balance transfer options available. As well, if you are currently paying a variable rate on an outstanding balance, inquire about securing a fixed rate. It’s also wise to look into consolidating various debts into one balance at a reduced interest rate.

“You can consider consolidating a number of debts by refinancing,” notes the Business Development Bank of Canada, “Essentially, you could get one long-term loan and one easier-to-manage payment per month. Businesses can also combine larger loans in order to diminish their monthly payments by extending the repayment period of the total debt over a longer period of time.”

Make strategic investments dedicated to business growth.

Decreased interest rates often spark a rise in consumer spending. This presents your business with a great chance to grow sales and attract more customers. Choose a suitable financing option and invest in key areas like technology, employee training, marketing and advertising. Freshbooks reminds us that, of your many options, social media marketing is not to be overlooked.

“Advertising on social media platforms such as Facebook and LinkedIn allow you to target specific demographics and pinpoints you to the people you’ve not reached out to,” informs the website, “This eliminates the extemporaneous clicks from consumers browsing or searching for information. With a small budget, you can target specific customers by their age, gender, education, and interests similar to your product/service categories.”

Work with Divvia!

At Divvia, we are on a mission to empower Canadian small and medium businesses with big-business capabilities. We support many of the nation’s thriving companies with one guiding principle: putting people first. Our team observes this promise every day in the way we support each other and our clients. If you’re just getting started or looking for a change, please don’t hesitate to call us at 1-877-748-2884 or send us a message on our Contact Us page!

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