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What is BDC's interest rate today?
BDC offers both fixed and floating interest rate plans, and helps you choose the one best suited to your needs. It is difficult to give a standard daily rate as other banks do, since BDC uses a formula of a base rate plus or minus a variance according to each project's potential and the amount of risk involved. As risk takers, BDC does its homework, and looks at your whole project – including your company's financial strength, management ability, and security – before calculating the interest rate and amount of financing needed. That often means more financing for less security and for a greater variety of projects. Customized financing solutions are based on your actual needs, not just your balance sheet.
Fixed versus floating rates
BDC gives its clients the option of choosing a fixed interest rate (with a term of up to 20 years) or a floating rate (which may change several times over the course of a year). It is your choice, based on your preferences and specific financial situation, without any pressure from the Bank. How do you choose?
A fixed rate is an attractive option:
- If you are looking for peace of mind knowing that your interest rates and payments will remain unchanged for the chosen term.
- If you cannot handle an increase in your payments because of limited payment ability or financial flexibility (for example, in a start-up or financially uncertain situation).
- If you want to protect yourself against a rise in interest rates.
- If you want to ensure you can manage the gap between your income and expenses, especially if your income is usually stable (e.g., supplier of premises, grocery store) and your investment project is longer term (financing a building or equipment, for example).
- If you are taking out a large loan and the interest paid represents a significant portion of your operating costs.
A floating rate is an attractive option:
- If variations in your interest payments do not seriously impact your financial viability.
- If you think interest rates will drop. Generally, rates fall during an economic slowdown and rise during a growth period.
- If your company's sales are affected by economic cycles and drop during economic slowdowns (e.g. manufacturers or tourism businesses).
- If you are making a short-term investment (e.g. financing working capital). If you are taking out a small loan and the interest paid represents a very minor portion of your operating costs.
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