Any long term interest rate products in the financial market? - fixed rate commercial loan
I variable-rate loans companies from the SBA for a term of 30 years. At that time, interest rates are low and my cash flow from operations of interest are very good. But if interest rates rise, the equation can change dramatically. How can I cover this risk? The SBA does not allow fixed interest rate.
Wednesday, January 13, 2010
Fixed Rate Commercial Loan Any Long Term Interest Rate Products In The Financial Market?
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There is a way to protect themselves, as she had. Because your loan is for a period of 30 years, I think it would be better to sell a futures contract on guaranteed for 30 years with the Chicago Mercantile Exchange. You need to do open an account with a commodity broker to do so. Interactive Brokers is the online book. There are problems with it. The contracts are not long term. The Treasury can now trade settlement September are marked on the spot market, which means that if the price goes against you, to create more space. As the settlement date approaches, you have to buy the contract and perhaps a loss of paper in the future with a brokerage fee, of course, one months for the purchase and sale. The contract is $ 100,000. Perhaps more of what they want to cover. IB has also open up a minimum of $ 10,000, an account. In any case, it is an option. With the sale of a contract if the interest rates will rise, the value of the contract falls and earn money to offset their increased interest rates for SBA loans.
HFront is another option. Very similar, but different and perhaps more. You can create an account with a broker online broker and selling individual funds open to an index run on the basis of long-term bonds. TLO is. The problem with this strategy is that short sellers have to pay the monthly dividend. Not good.
One option to consider is this: If interest rates rise, stock prices in the past tend to increase with the area, as it will make it difficult for a company money on interest rates. Another possibility would be so short a basket of stocks that pay no dividends or shares, the low dividends. There are index funds that can do for you and will also pay dividends. SPQ is. Shorted the NASDAQ 100th The stock has recently recovered, the price is so low. When interest rates rise, the price should rise. I think he would wait until it is an indication of seizures has increased. The economy sucks and the government is worth money to save the basket all Dead Beat borrowers - AIG, GM, C, BAC, etc.
Remember that the extra money to pay and save for a rainy day or in advance or Xtra-date in the bill.
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