Business Owners, it's time to get credit for your business... NOW!

Recently, the Federal Reserve raised its benchmark interest rates 0.75 percentage points and plans to continue to do so. According to CNBC, this is the “most aggressive hike since 1994.” To add, inflation is rising at its highest in nearly 40 years.

“We want to see progress. Inflation can’t go down until it flattens out,” Powell said. “If we don’t see progress ... that could cause us to react. Soon enough, we will be seeing some progress” (CNBC, 2022).

Despite a current strong job market and growth, May 2022 was the lowest job-gain since April 2021. The unemployment rate currently sits at 3.6% and is projected to hit 4.1% by 2024.

Business owners across the nation have become incredibly strong and resilient having to navigate the ever changing landscape that accompanied the Covid-19 pandemic. As the Federal Reserve continues to increase interest rates, local and federal banks are also increasing their rates.

“Wells Fargo CEO, Charlie Scharf, said that there was ‘no question,’ that the U.S. economy is heading toward a downturn” (WA Post, 2022). Additionally, he predicted it may not be as severe with the current strength of consumer demand and business activity. However, banks have already begun to retract on commercial credit facilities.

WHAT DOES BANK RATE INCREASE MEAN FOR SMALL BUSINESS OWNERS?

Small business owners may experience limited or reduced funding approval in the months to come, if approval at all. It may become increasingly more difficult to become approved for one or more bank business line(s) of credit. Banks that are unable or choosing not to lend to small businesses could potentially create a credit gap in the near prime range of small business owners. 

I OR SOMEONE I KNOW IS A SMALL BUSINESS OWNER, NOW WHAT?

NOW is the time to secure business loans for various expenses: take an inventory, restructure, get new equipment, etc. Do not wait until the recession has begun. ACT quickly and proactively to prepare yourself and your business.

Luckily, Line of Credit Depot works with numerous local banks to secure our clients the best possible access to working capital. Our advantage is our relationships that we create and continue to support.

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To secure working capital before it’s too late, apply here.

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Resources

Bhattarai, Abha. (May, 2022). The Washington Post. U.S. Economy may be barrelling toward recession in next year, more experts say. Retrieved June 15, 2022, from,  https://www.washingtonpost.com/business/2022/05/19/recession-economy-markets/

Cox, Jeff. (June, 2022). CNBC. Fed hikes its benchmark interest rate by 0.75 percentage point, the biggest increase since 1994. Retrieved June 15, 2022, from, https://www.cnbc.com/2022/06/15/fed-hikes-its-benchmark-interest-rate-by-three-quarters-of-a-point-the-biggest-increase-since-1994.html

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