Updated 7/15/10 Is Refinancing Right For You? Over the past few years, short-term interest rates have been unbelievably low compared to historical rates. As a result, many business owners including myself have operated using more short-term financing and less mid-term or long-term financing.   How you should plan for debt financing in the coming years is a question that you should ask yourself. Should you stay with short-term rates or shift to mid or longer term financing? Many prognosticators are predicting inflation increases followed by interest rate hikes over the next few years. Many events are potentially fueling this trend toward higher interest rates. The question you need to consider is, “Should I capitalize on locking in some mid or long-term interest rate loans now, before we experience this interest rate increase?” History is not always a perfect indication of the future; however, if it gives a hint as to the likelihood of our future interest rates, we can see that we have experienced an unprecedented period of low rates. The next question is when will these rates increase as they are being predicted. For those business owners or individuals heavy in short-term debt, I encourage you to consider what the proper mix of short-term, mid-term, and long-term debt is for your operation.  I’m not suggesting you should load up exclusively on long-term debt. Some operations may need to do more than others. Some should be concerned that by paying down your line of credit, it will cause you to spend more in the future because there is money available to spend. My suggestion is to thoroughly consider your overall operation’s finances and determine where your current debt mix needs adjusted while long-term rates are at all time lows. If you are uncertain how to analyze your debt mix, give us a call for help. It’s pretty likely, this trend won’t last forever! Back to home