{"url_path":"/sec/hlp/10-k/2026/item-11","section_key":"item-11","section_title":"Item 11 QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET","topic":"sec","document":{"doc_type":"20-F","doc_date":"2026-05-13","source_url":"https://www.sec.gov/Archives/edgar/data/1855557/0001213900-26-055737-index.html","accession_number":"0001213900-26-055737","cik":"0001855557","ticker":"HLP","issuer_name":"Hongli Group Inc.","edgar_url":"https://www.sec.gov/Archives/edgar/data/1855557/0001213900-26-055737-index.html","primary_entity_key":"0001855557","primary_entity_name":"Hongli Group Inc."},"word_count":430,"has_tables":true,"body_markdown":"Item 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET\nRISK\n\n* *\n\n*Liquidity risk*\n\n \n\nWe are exposed to liquidity risk, which is the\nrisk that we will be unable to provide sufficient capital resources and liquidity to meet our commitments and business needs. Liquidity\nrisk is controlled by the application of financial position analysis and monitoring procedures. When necessary, we will turn to other\nfinancial institutions to obtain short-term funding to meet the liquidity shortage.\n\n* *\n\n*Inflation risk*\n\n \n\nInflationary factors, such as increases in personnel\nand overhead costs, could impair our operating results. Although we do not believe that inflation has had a material impact on our financial\nposition or results of operations to date, a high rate of inflation in the future may have an adverse effect on our ability to maintain\ncurrent levels of gross margin and operating expenses as a percentage of sales revenue if the revenues from our services do not increase\nwith such increased costs.\n\n* *\n\n*Interest rate risk*\n\n \n\nAs of December 31, 2025, we had aggregate variable-rate\nborrowings, including the term-loans borrowings, factoring loan, and the revolving credit loan from various banks and financial institutions.\nThe following table depicts the outstanding balance of the term-loans, factoring loan and revolving loan from each bank and financial\ninstitution.\n\n \n\n  \nAs of  \n  \n\n  \nDecember 31,  \nInterest Rate Impact on Expense \n\nFinancial Institutions \n2025  \n1%  \n3%  \n5% \n\nShort-term loans\n \n   \n   \n   \n  \n\nRural Commercial Bank of Shandong \n$4,289,942  \n$42,899  \n$128,698  \n$214,497 \n\nIndustrial and Commercial Bank of China \n 428,997  \n 4,290  \n 12,870  \n 21,450 \n\nBank of Beijing \n 714,990  \n 7,150  \n 21,450  \n 35,750 \n\nBank of Rizhao \n 714,990  \n 7,150  \n 21,450  \n 35,750 \n\nChina Minsheng Bank \n 1,286,982  \n 12,870  \n 38,609  \n 64,349 \n\nXCMG Commercial Factoring (Xuzhou) Co., Ltd \n 672,091  \n 6,721  \n 20,163  \n 33,605 \n\nTotal short-term loans \n$8,107,992  \n$81,080  \n$243,240  \n$405,401 \n\nLong-term loans\n \n    \n    \n    \n   \n\nBank of Weifang \n$100,099  \n$1,001  \n$3,003  \n$5,005 \n\nBank of Weifang \n 1,272,683  \n 12,727  \n 38,180  \n 63,634 \n\nRural Commercial Bank of Shandong \n 1,993,393  \n 19,934  \n 59,802  \n 99,670 \n\nShenzhen Qianhai WeBank Co., Ltd \n 40,857  \n 409  \n 1,226  \n 2,043 \n\nTotal long-term loans \n$3,407,032  \n$34,071  \n$102,211  \n$170,352 \n\n  \n    \n    \n    \n   \n\nTotal \n$11,515,024  \n$115,151  \n$345,451  \n$575,753 \n\n \n\nSubstantially all loans are borrowed with a fixed\ninterest rate. The table above indicates the total interest expenses for the increase of interest rate by 1%, 3% and 5% on an annual\nbasis of our total outstanding bank loans. The increase in the amount of interest expenses will have an adverse impact on our income.\n\n \n\nOur exposure to interest rate risk primarily relates\nto the interest rate on our outstanding loans above-mentioned. We have not been exposed to material risks due to changes in interest\nrates. An increase, however, may raise the cost of any debt we incur presently and in the future."}