AmiSights 2/16: Is a Higher Interest Rate a Deal Breaker?
My client was so excited about the prospect of buying out a top competitor who was retiring. And then, I told him that the SBA 7(a) interest rate had increased by nearly 5 percent, raising the monthly payments by a total of about $27,000 a year.
Over at 21hats.com, this doesn't have to be a deal breaker. Yes, the monthly payments would be higher at first, but there are other things to consider. For one, the seller might consider lowering the price to offset the higher interest rate. And let's remember SBA loans are stretched out over ten years. A lot can happen in 10 years, so the interest rate will likely fluctuate over a decade.
My client has been waiting a while for this opportunity. He needs to make the best decision for his situation. What would you do?