Main Street Monday – Borrowers are Paying the Highest Short Maturity Interest Rates Since June 2007

July 17, 2023

Delaney Sexton
Contributing Editor

Main Street Monday – Borrowers are Paying the Highest Short Maturity Interest Rates Since June 2007

“All eyes are on the Federal Reserve, which has signaled that it might raise interest rates by half a point (50 basis points) by year end. Higher rates will discourage borrowing to finance spending of all types, including capital spending which is needed to improve productivity and real incomes,” reads the NFIB’s June Small Business Economic Trends report. Small business optimism did rise in June 2023, but generally, optimism has remained low in the last year. The Uncertainty Index also saw increases and reached its highest level since July 2021.

Credit Markets

  • 28% of owners are borrowing at least once every three months.
  • 60% of owners are not interested in a loan, down 3%.
  • More than a quarter of small business owners had all their credit needs met in June.
  • Only 2% of owners did not have their credit needs met.
  • 6% stated that their last loan was harder to obtain than previous attempts to obtain loans.
  • Down 2 points, 2% of small businesses reported that their top business problem is financing.
  • Almost a quarter of small businesses said that they are paying a higher rate on their most recent loan.
  • An increase of 1.4% from May, the average interest rate paid on short maturity loans was 9.2% in June. NFIB reports that this is the highest reading since June 2007.

Capital Spending

  • Over half of business owners reported capital outlays in the last six months, a decrease of 4% from May.
  • A majority of those who made expenditures purchased or leased new equipment (37%).
  • This is followed by vehicles (21%) and improved or expanded facilities (14%) being the most common capital expenditures.
  • 6% of businesses that made expenditures acquired new buildings or land for expansion.
  • 25% of small business owners plan to make capital outlays in the coming months.

NFIB June Small Business Economic Trends