Since March 2022, the key interest rate has risen from 0.50% to 5% on July 12. What are the implications for your company?
Obviously, working capital! You’ll need more money to pay interest on your debt. For example, a $50,000 loan signed in March 2022 will cost $7,600 in interest at its 5-year term (excluding principal) versus a loan obtained in July 2023: $13,700 in total interest! And that’s not counting rate variations along the way… Practically double! What should you do? Tap into the company’s “nest egg”? Adjust your selling price? Review your expenses? Do you have the capacity to personally reinvest in your business? Or revise your business model to get through this turbulent period?
Be prepared!
It’s important to measure the effects on your business in advance : by making budget forecasts and keeping your financial statements up to date! And before resorting to new financing, assess the impact on your working capital. Are you in a position to keep up with these interest rate rises until the end of the term? Why not ask CAE for advice beforehand?
To support businesses, the CAE is proposing to adjust the key rate on annual renewal, depending on the situation. Has the prime rate gone up? The CAE “freezes” the base rate set when you signed your financing for another year. Has the prime rate fallen? CAE adjusts it downward at renewal. Think about it!
The CAE Haute-Yamaska et région offers loans of up to $150,000 with the following advantages:
- adjustment of stocking rate at renewal
- promotional video broadcast with La Voix de l’Est and CAE
- 1,000 non-refundable technical assistance on professional fees
- Be the first to know about new technical assistance programs such as Virage Vert
Subscribe to our newsletter, we’ll have cohorts to … make your financial forecasts together!
And above all, get informed!
