Cut Your Financing Costs With short-term interest rates going up, now's the time to trim financing costs by cutting back on adjustable-rate loans.

Like any business owner, Jeff Samuelson never has cash flow far from his thoughts. "We want to be more liquid so we can be nimble in making decisions and not [be] locked into raising [money] to get something done, like funding a new product line or making other moves in the business," says the owner of Samuelson True Value Hardware and Lumber in Craig, Colorado.

Until recently, though, that was difficult because the business's cash flow was being squeezed by a hodgepodge of short-term, variable-rate loans--12 in all. Samuelson knew that consolidating those credit products, which ranged from equipment leases to commercial real estate loans, would help reduce financing costs. And with interest rates rising, the time had come to make the switch to fixed-rate financing. "We knew that if we didn't lock in the adjustable-rate loans, the interest rates would continue [to increase]," recalls Samuelson, 40, who owns and operates the $8.5 million business with his brother, Mark. "We knew we were going to save substantially [with fixed-rate loans]."

To that end, the Samuelson brothers recently consolidated the company's outstanding debt into a $1.4 million loan that has a fixed rate and a longer amortization schedule. "We improved the average rate we were at by consolidating into one loan," Jeff says. "We also improved the rate because of the [interest-rate] climate we're in now, whereas before, we had loans that we had [obtained] over the years at different times [and at higher interest rates]. I thought this was a good time to lock the rates before they continued to increase."