I have floating rate SBA commercial borrowing with 30 year term. Right now, the interest rates are low and My cash flow from the operation covers interest very well. But if Interest rates go up, the equation can change dramatically. How can I hedge this risk? SBA does not allow fixed rates.
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Unfortunately, the only way to hedge against this risk is to get a fixed rate. The adjustable rate loans are definitely NOT to protect the consumer, it's how the bank protects themselves from interest rate risk. Refinancing to a fixed rate is really your only option.
How to hedge interest rate risk on loan liability?
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