Interest-Rate Floor

Interest-rate floor is a contractual minimum interest rate or benchmark level below which the applicable rate will not fall.

Why this matters to income investors

The contractual minimum can protect part of a lender’s interest income during falling rates.

How to use interest-rate floor in your research

Check when the asset income and borrowing costs reset. A rate change can reach each side at a different time, so compare the net effect on the earnings used to fund distributions.

This material is general education and information, not individualized investment, tax, or legal advice.