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RATE CHANGES

The official RBA interest rates are now at 3.25%, down from 7.25% in March 2008.

Although the cash rate is at historical lows, interest rates for different types of finance can still be relatively high. Investment loans can be 6-10%, equipment loans 7-10%, overdraft rates around 10% and credit card debt 12-20%. Debts to the ATO attract interest of 11.76% compounded daily. If you have a mix of business and personal debt then chances are that most of your business debt is charged in the 8-12% range.

Most business people will have several different types of debt brought about for different reasons and the characteristics of these debts will be quite different. For example the interest rate, life of the loan, whether you are paying principal or interest only and the ability to accelerate payments.

So for many businesses there is potentially money to be saved either through debt consolidation or restructuring. Now is certainly the time to meet with your banker to review your current debt obligations and tailor them in a way that is most beneficial to your business.