Businesses across Alabama are facing rising costs everywhere they look these days , from raw materials and labor to logistics and insurance premiums .

As a commercial banker in Montgomery , I ’ ve seen inflation directly affecting many of my clients in industries like hospitality , manufacturing and transportation . I spend a lot of my time right now showing people how to best deploy the money they have ( or can borrow ) to create value , while earning the best return they can . With that in mind , I ’ ve put together answers to questions business owners are asking me to help you navigate rising costs .

WHAT ARE SOME TRENDS YOU ’ RE SEEING AROUND RISING INTEREST RATES ? While some material costs are starting to level off , the labor market is tight and increasingly becoming more expensive . The rising interest rates have also impacted the cost of capital , so that is slowing the number of new deals . With rates more than doubling in a lot of cases , that definitely impacts growth .

DO YOU THINK RATES WILL CONTINUE TO INCREASE ? I think interest rates on loans will stabilize . For context , a

loan secured today would carry an interest rate that ’ s five percentage points higher than the same loan two years ago . I know this can be shocking for businesses , but I don ’ t see rates dropping anytime soon .

HOW CAN MY BANKER HELP ME RIGHT NOW ? Now is a great time to take a fresh look at your business budget . Working with your banker , you can look at your cash flow and make sure your business is using it as efficiently as possible .

One of many options is a zerobalance account * or ZBA . Using a ZBA , you consolidate your funds into one account that is earning interest , while holding your operating account at zero . When a transaction is initiated , the funds automatically transfer to the operating account . This simplifies your accounting and reconciling processes , while also saving you time and earning you money .

HOW CAN I SECURE THE BEST INTEREST RATE ON A NEW LOAN ? If you can lower the bank ’ s risk , you can lower your rate . In the current market , if you can work with the current rate , try to get a fixed term for as long as possible . The other side of

this coin is that what you earn on deposits is also increasing . So , if you can work with your banker to increase deposits , you may not be losing as much to higher rates as you think .

INSURANCE PREMIUMS ARE INCREASING . DO YOU HAVE TIPS TO COMBAT THIS ? First , talk with your bank or your financial advisor . At Valley , we have Valley Insurance , which is designed to provide you with tools and a dedicated advisor to make sure you have the coverage you need at a cost you can afford . If rates are still higher than you can handle , our Agile Premium Finance division can be a great resource to help you tackle higher premium costs .

This article is made available for informational and educational purposes only . The opinions expressed in this article may differ from other employees and departments of Valley National Bank . Opinions and strategies described may not be appropriate for everyone , and are not intended as specific advice / recommendation for any individual . You should carefully consider your needs and objectives before making any decisions , and consult the appropriate professional ( s ). All loans products are subject to credit approval . Additional terms and conditions apply .

Chase Hardy is a Relationship Manager for Valley Bank based in the Zelda Road office in Montgomery . He has been in the banking industry for more than 13 years .

* Fees may apply and vary depending on business pricing package .

Valley National Bank is an FDIC Insured , regional bank . Banking products and services are provided through Valley National Bank and insurance products and services are provided by Valley Insurance Services , Inc . (“ VIS ”). VIS is an insurance agency and a subsidiary of Valley National Bank . © 2023 Valley National Bank . Member FDIC . Equal Opportunity Lender . All Rights Reserved .