As the Federal Reserve raises interest rates to reduce inflationary pressures, small businesses are likely to see their access to financing drop in the coming year. This reduced access is especially problematic because small businesses historically have difficulty qualifying for financing.
An analysis by the Federal Reserve Bank of Kansas City shows that bank lending to small businesses dropped by about 35% over the past year. “As banks scale back their lending to small businesses, and less-mature alternative lenders struggle to meet demand, small business owners will have fewer options for financing,” said Ben Johnston, chief operating officer at Kapitus, a small-business financing firm.
