The Reserve Bank of New Zealand recently announced a drop in the official cash rate (OCR), with a drop from 4.25% to 3.75%. The final impact of this drop can be both positive and negative for your small business, so it’s worth understanding the effect interest rate changes can have.
Lower interest rates on loans: This directly translates to lower interest payments on your existing loans and potentially more favourable interest rates on any new loans you take out.
Increased access to credit: With lower borrowing costs, you may find it easier to secure financing for expansion, investment in new equipment, or to overcome and present challenges.
Reduced debt service: Having lower interest payments frees up cashflow. This can be used to reinvest in the business, used for marketing, or distributed to shareholders.
Increased consumer spending: Lower interest rates help to stimulate consumer spending. This can mean increased demand for goods and services, higher sales and boosted revenues.
Lower cost of capital: With cheaper borrowing costs, you can invest in growth, including research and development, technology upgrades or hiring new staff.
Increased confidence: Lower interest rates can boost investor confidence. This makes it easier for you to find investors and raise capital through equity financing.
Stimulate the economy: Lower interest rates can boost economic growth by encouraging borrowing, investment and consumer spending. This creates a more favorable environment for your businesses to thrive in. A stronger economy = a more stable future.
With lower interest rates, now could be the perfect time to invest in your business and bring your 2025 strategy to life. Access to affordable financing means more opportunities to expand, upgrade equipment or strengthen cash flow—setting your business up for long-term success.
Talk to the team about your growth plans and how these interest rate changes may impact your business. We’re here to help you reinvest, grow and keep on evolving.