Low interest rates make borrowing inexpensive, hence motivating more debt and access to capital at a cheaper price. In essence, low rates will stimulate business investments such as launching new projects, acquiring others or refinancing existing debts under better terms. For example, companies issue bonds to finance their debts on costly interest at a low rate that lowers the servicing cost, thus improving cash flow during periods of low interest rates.

Another way in which interest rates corporate finance is through firms that have outstanding variable-interest-rate loans whose interest payment are indexed to the market rate . In that scenario, of course, higher interest rates would mean higher interest payments on such loans, perhaps squeezing even further the cash flow of corporation and reducing cash balance available for investment. Firms having large volumes of outstanding variable-interest-rate debt would directly