When you’re considering new funding, it’s easy to focus on whether the repayments are affordable today.
But what happens if interest rates rise?
As a simple illustration, a 1 percentage point increase on a $1 million loan balance could add approximately $10,000 in interest over a year—or around $833 per month.
On $3 million, that’s approximately $30,000 a year.
For a business already managing equipment repayments, working capital and growth, that additional cost can make a difference to cash flow and future decisions.
The question is: how much room does your business have to absorb a change?
An interest rate sensitivity analysis can help you:
- Understand the potential effect of higher interest costs
- Assess the impact on cash flow and debt servicing
- Plan for future investment and funding needs
- Make more informed decisions about your finance structure
The example above assumes the loan balance remains constant for the full year. The actual impact will depend on your loan balance, repayment structure and other terms.
Use our Interest Rate Sensitivity Calculator to explore what a change could mean for you.
If you would like to understand how your existing or proposed funding fits into your broader business plans, let’s talk.
André Barkhuizen
Chartered Accountant | Accredited Finance Broker
Advanced Finance Group
📞 0497 432 090
🌐 advancedfinancegroup.com
#BusinessFinance #InterestRates #CashFlow #CommercialFinance #FinancialPlanning #AdvancedFinanceGroup
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