Let’s get the bad news over with… Global Financial & Leasing Services is headquartered in Scottsdale, Arizona. Our equipment financing experts are paying over $5 a gallon for gas. Even if your business is located elsewhere across the country, you and your employees are paying close to or over the five-dollar mark. Gas isn’t the only thing we’re paying more for now.
Last month, consumer prices for products and services, such as food, rent, gas and travel rose quickly. Recent headlines point out 2022’s annual inflation rate increase is larger than any single year since the early 1980s.
Now, add interest rate hikes. According to a Reuters poll of economists released this month, the U.S. Federal Reserve will hike its key interest rate by 50 basis points in June and July, with increasing chances of a similar move in September. These economists anticipate no end in rate rises until 2023. Earlier this year, Philadelphia Federal Reserve Bank President, Patrick Harker, said he would support three interest rate hikes this year and would be open to more if inflation worsens.
Feeling Skittish? You’re Not Alone.
You need only to look at your retirement or investment accounts to see how the stock market is reacting to this bad news. After the May inflation rate statistics were released, the Dow dropped 800 points and S&P 500 posted its worst week since January.
In May, even before inflation hit its high from 1981, CNBC reported that eight in 10 small business owners are convinced the U.S. economy will enter a recession this year. The survey found “38% of small business owners say inflation is their biggest concern, twice as many as the second place ‘supply chain disruptions’ (19%) and above ‘Covid-19’ (13%) and ‘labor shortages’ (13%).
As consumers, we’re all feeling it at the pump, the store… almost everywhere. As business owners, we’re all feeling it in supply costs, rising rents, vendor invoices other expenses.
Does All This Bad News Mean You Should Hold Off on Financing Equipment for Your Business?
Attempting to time the market or determine if/when a recession will occur are futile. The best anyone can do is make financial decisions based on the information they have now, which makes it challenging to decide when you should finance equipment to grow your business. Here are two reasons business owners might not want to hold off on financing essential business equipment.
- You can lock in lower interest rates.
If you’re on the fence about financing a piece of equipment for your business, weigh the cost versus what you could receive in return. Perhaps that equipment could improve distribution, reduce labor costs, increase staff productivity, shave time off completing projects or make your business more competitive in your industry or area. If any of these are the case or you have another compelling reason for financing new or used equipment, then it might be wise to do it now. You could take advantage of lower interest rates compared to what could be coming next month or in the fall when the Fed is expected to increase them.
Even though interest rates are climbing now, the savings you could achieve by financing now means extra savings you can use to fund other business goals.
- You have the chance to finance the purchase or lease of your equipment before inflation increases the price.
The Fed is raising interest rates to fight inflation. Despite that effort, inflation will continue to drive prices higher for equipment; no different than fuel, energy, food, etc. Essentially, assuming (as many economists are) continued inflation throughout 2022 means the price tag for your leased or financed equipment will be lower now than in the near future.
Let Our Equipment Financing Experts Help
Nobody understands your business like you do. And, when it comes to equipment purchase or lease financing, our Certified Lease and Finance Professionals (CLFP) can help guide your decision process.
CLFPs are the best of the best in the world of equipment financing. They must be able to demonstrate extensive knowledge of the field, and also, they must prove that they have never been involved in any questionable transactions.
When you work with a CLFP like those here at Global Financial & Leasing Services, you know that your lender is competent and has your best interest in mind.