How Ben Bernanke's Economic Exit Plan Will Impact Your Business Loans This Summer

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in The Business of Business Finance

The U.S. Federal Reserve has had little success over the past several years at accomplishing its main objective: To manage the U.S. economy to avoid boom and bust cycles. Chairman Ben Bernanke is taking steps now to end that economic volatility and avoid a pending period of severe inflation.

How? By developing a plan to tighten the money supply. 

What's Happening?
Bernanke is giving business owners ample advance notice and explaining what he anticipates might be his next moves to manage the next economic cycle he's forecasting.  The Chairman is offering some real transparency into his thinking.

Pay attention!  You can learn more by watching this video.

The two important questions are:

1) When will Chairman Bernanke begin to implement his new fed policy?
Answer: No one knows exactly, but it's safe to assume the changes will roll out sometime over the summer months.

2) How will the new policy impact your business operations?
Answer: To the degree that your business relies on cheep and plentiful credit, you will feel a significant impact. 

What's a Business Owner to Do?
I am a personal fan of Mr. Bernanke and anticipate he will take the necessary steps to keep our macro economy improving by raising interest rates.  Although higher interest rates will increase the cost of capital to your business, expect this increase to be relatively small over the balance of 2010.  The ripple effect: Fewer businesses will qualify for business loans, and those who do will qualify for smaller business loan amounts.

Rather than complain about raising rates and tougher credit requirements — both necessary for national economic health — use this advance notice from the Fed Chairman to take the necessary financial steps in your business now.

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