Businesses Need Smart Loan Repricing Strategies

Borrowers facing maturities of loans written two or three years ago are facing rates 4-5%  higher. There’s not much to do about the rate, but structure can minimize the payment increase. That’s where we can help.

Mitigate higher loan repricing rates

While high interest rates are unavoidable, there are ways to reduce their impact.

1. Be prepared. Start early.

If you own a commercial property, it’s best to begin thinking about interest rates ahead of time. That way, you will have time to explore various alternatives.

2. Consider a shorter-term renewal. 

A shorter-term fixed rate (or even a floating rate loan) will allow you to benefit if rates fall in the future. 

3. Swaps can fix the rate of a floating rate loan
    
If your best financing alternative is a floating rate, you can remove the risk of rising rates by using derivatives like swaps.

4. Bring in more capital. 

To maintain your current payment amount when rates rise, you can look at lowering your loan amount by bringing in more capital. In some cases, it may make sense to cash in other investments to pay down your debt.

5. Stretch out amortization. 

For some small business owners, borrowing from a Small Business Administration (SBA) program may be an attractive alternative to a conventional loan. With an SBA loan, you may be able to stretch out payments over longer periods of time. Longer amortizations will reduce payments—preserving your cash flow. 

A preferred SBA lender with a specialized SBA loan team and a reputation for supporting small business owners, First American Bank was recently named Illinois CAPLine Lender of the Year by the SBA.

First American Bank: the answer to your loan repricing concerns

Businesses everywhere trust First American Bank to structure the best financing possible, all with your organization’s best interests in mind.  First American Bank ensures creative, attractive solutions by putting you first. 

What sets us apart?

Specialized experts, customized solutions

Our loan specialists look at your entire picture to structure an optimal solution, minimizing the impact of high interest rates. While other banks may leverage a single strategy for all of their clients, First American Bank prioritizes your distinct needs and circumstances to create tailored loans.

Cross-functional collaboration for better results

Our commercial lending, commercial real estate (CRE), and SBA teams work together to structure deals for our clients.

For example, many borrowers get loans with terms of 5 to 10 years when they pledge business assets as collateral. Pledging real estate may let you space out a loan payment over a term of 15, 20, or even 25 years. Spreading terms out over more time will lower your monthly payments. 

First American Bank drives results

It’s natural to feel overwhelmed. But with First American Bank—a trusted financial partner to businesses in all sectors—you can confidently navigate whatever comes your way.

Higher interest rates are here to stay—and the right banking partner can make all the difference. By being proactive, partnering with First American Bank for guidance, and embracing new strategies, you can implement the effective financing strategy you need to flourish.