Inflation is making the headlines and seems to be foremost in the minds of everyone these days. That’s why in today’s blog we talk about what inflation is, why it happens, and help you understand whether taking out a commercial loan to manage the effects of inflation is a good idea.
What Is Inflation?
This is one of those terms everyone has heard in the news at some point but not everyone understands.
Simply put, inflation refers to a generalized increase in the prices for goods and services.
There are many reasons why inflation happens. In the specific case of the pandemic, there are many factors at play, including a supply chain crisis, and an increase in the price of energy. However, the main cause driving inflation nowadays is a surge in demand.
Since they are staying at home and can’t travel much, people are buying more products. Companies understand that this means that consumers are willing to pay more for the goods and services they can use under the current circumstances. Hence, prices rise.
To put this phenomenon into context, According to the US Bureau of Labor Statistics, consumer prices rose 7.5% between January 2021 and January 2022, the largest 12-month increase since February 1982.
Is It a Good Idea to Take Out a Commercial Loan to Manage the Effects of Inflation?
Inflation affects consumers and businesses alike. In the case of companies, inflation can cause everything from cash flow shortfalls and lower profit margins to demands for wage increases on the part of workers.
Does it make sense to take out a commercial loan to face all these challenges? As in many business dilemmas, the answer depends upon your specific situation.
Some of the things companies do most often to deal with inflation include raising prices and decreasing staff. If you can’t apply these solutions, or if you applied them already and need to do more, then you may consider a business loan.
Keep in mind, however, that you have to ask yourself some basic questions such as:
- What do I need the money for?
- Can I repay the amount I intend to borrow?
- How much money do I need?
- What does my credit profile look like?
If you can’t answer these questions honestly and convincingly, then a commercial loan may not be what your organization needs.
However, if after answering these questions you conclude that a commercial loan does make sense, at Gellyfish Commercial we have an option that meets your needs:
Finally, it’s worth noting that if you have an existing loan, refinancing makes more sense than ever. If you have an SBA loan, check out this previous post where we talk about recent changes to refinancing rules that can be a total game changer for your business.
Gellyfish Commercial: Facilitating Commercial Cash Flow
If you need financing in California, or anywhere in the United States, Gellyfish Commercial can help.
Contact us today by email (firstname.lastname@example.org), telephone (877-800-4493), or social media (Facebook, Twitter, LinkedIn), to schedule a free consultation or to learn more about our financing solutions.