- On April 17, 2017
There is no doubt the cost of capital for business loans is increasing. We don’t see the consequences of the recent hike and the expected additional two hikes in 2017 to be considered too severe by most advisors focused on inorganic growth through acquisitions.
- Advisors who have existing SBA or other variable rate loans are going to see slightly more expensive loan payments soon – most SBA lenders calculate rate adjustments on a quarterly basis.
- A $1MM SBA loan you got a year ago when the WSP was 3.5% is now costing you about $250 more per month with the WSP at 4%.
- A 1% increase in WSP (from 4% to 5%) would result in a payment increase for a $1MM SBA loan at 2.75% over WSP to $12,000 from $11,500.
- With higher rates, buyers may push harder for sellers to finance more of the deal and may have more resistance to paying premium pricing.
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