UAE businesses cut down credit periods, pay off loans early after latest interest rate hike

UAE businesses cut down credit periods, pay off loans early after latest interest rate hike

Dubai: UAE-based businesses, especially those in retail and construction sectors, are trying to drastically reduce credit periods on payments owed to them, or bring forward their repayment of outstanding loans to get a handle on increasing costs. On the early repayment, the thinking is that it’s best to clear all outstanding loans now rather than risk having to pay up when there will be additional interest rate hikes and making loan instalments even more expensive to bear. “Paying off bank loans in full will have an impact on our cashflow now, but waiting could prove more painful,” said an owner of a logistics business. “Both inflation and rate hikes suggest carrying less debt on the books is the best way for now.” A week on from the US Fed Reserve’s 0.75 per cent hike – and matched by the UAE Central Bank – businesses and borrowers are having to come to terms with what all this means to their operations. They need to make some quick adjustments because another – similar sized? – hike is due in July too. Right now, any borrower – whether individual or business – with a loan still on a fixed-rate basis is best placed.