I Just refinanced my mortgage. Mortgage rates are near historic lows, and, while lenders are pickier than ever these days, I have the kind of credit that makes me an attractive risk for creditors. That means I am in a position to take advantage of the debt market. By borrowing new money now at significantly lower interest rates, I can pay down old debt that would carry a higher interest rate and save myself a bundle.
Similarly, if I owned a business, I could use my access to “cheap loans” to fund investments that promise a rate of return to outpace my interest obligations. Obviously, these investments may involve some level of risk (investments always do), but if I were sufficiently judicious, I might well turn my deficit into a surplus by earning a rate if return that exceeded what I owed.
This is the primary way that businesses grow, which is why access to capital is critical to economic growth and job creation. Very few businesses have the cash on hand to fund long-term strategic expansions.
