Is your business about to feel the squeeze from rising interest rates
This strong feeling reflects a fear many small business owners have rising interest rates mean higher loan payments. In fact, between May 2021 and May 2025, the average SBA loan size dropped 38% despite only a small shift from 13.25% to 13.50% APR because higher rates shrank what business owners could afford.
Lenders roll out higher interest whenever the Federal Reserve hikes its benchmark rate. Higher APRs increase monthly burdens, cutting into cash flow and reducing profitability especially for businesses relying on variable rate loans.
With more revenue diverted to interest payments, less remains available for payroll, inventory, or daily operations. Products and services with thin margins feel this squeeze first.
When borrowing costs rise and demand softens, businesses often delay expansion plans. Even if loan approval is possible, amounts may be lower and repayment more costly.
Lenders tend to pull back during rate hikes, tightening credit and making it harder to secure new loans even for creditworthy companies.
Here are clear, useful steps to help manage rising loan costs:
Look into switching from changing rate loans to fixed ones before rates climb more. Fixed rates make it easier to plan and protect you from surprise changes.
Pick funding options that fit how your money flows. For example, LNS Group’s Revenue Based Financing lets you pay back a small part of your income so payments adjust with how much you earn.
Give small discounts for faster payments.
Ask vendors for more time to pay bills.
Keep less stock, and move it faster.
Spend more time on offers that bring in the most profit like upgrades, bundles, or special services to help cover loan costs.
LNS Group gives you Credit Lines or Term Loans with clear costs, no surprise charges, credit you can reuse as you pay, and fast cash great for covering slow times or busy seasons.
You can lock in steady rates or, if needed, look into tools like swaps or rate caps. These are mostly used by big companies, but knowing how they work can help you avoid big losses.
Solution
A small boutique had taken out a variable rate loan to expand inventory and update its checkout system. But as interest rates climbed, the monthly payments started eating into profits.
Problem
The owner refinanced through LNS Group with a fixed rate Term Loan. Payments became predictable, which helped her manage the budget better. With less stress around cash flow, she could focus on boosting sales instead of juggling bills.
Solution
Sales were up, but revenue kept swinging month to month. With no consistent pattern, taking on a traditional loan with fixed payments felt risky and limiting.
Problem
The owner turned to Revenue Based Financing through LNS Group. The flexible repayment model tied to their weekly income meant that during slower weeks, payments adjusted. It gave them room to breathe while still fueling growth.
Solution
A mobile auto repair business needed more service vans to meet growing demand. But with high equipment costs and rising interest rates, financing a new vehicle felt like a burden.
Problem
They used LNS Group’s Equipment Financing to add two vans to their fleet. The payment plan was easy to manage and didn’t strain their monthly budget. The payment setup was simple to handle and didn’t stretch their monthly budget. The team grew their reach without adding stress to their day to day operations.
As interest rates go up, borrowing gets more expensive and that can slowly eat into your cash, hold back growth, and make it harder to get new funds. But by staying ahead refinancing wisely, picking loan options that move with your income, managing cash better, and focusing on the parts of your business that bring in the most profit you can turn rising rates into a chance to manage your money smarter and grow stronger.
Whether you need Revenue Based Financing, a Line of Credit or Term Loan, SBA Loan, or Equipment / Real Estate Financing, LNS Group LLC gives fast, easy to understand options made to match your business and how your money moves often with funding in just a few hours.
Not sure how to handle rising rates or pick the right kind of loan? Talk to LNS Group today and book a free call. We’ll build a simple, flexible plan to keep your business moving forward no matter how high the rates climb.