Main Street Monday – Continuous Climbing Interest Rates Burden Small Businesses

May 15, 2023

Delaney Sexton
Contributing Editor

Main Street Monday – Continuous Climbing Interest Rates Burden Small Businesses

“Now, the economy appears to be slowing. That will mean that the Fed will be under pressure to cut rates to stimulate the economy and support employment,” writes Bill Dunkelberg, the NFIB’s Chief Economist. “While savers are happily receiving higher interest returns, borrowers are facing higher credit costs. And businesses borrowing to finance expansion or equipment are paying higher financing costs.”

Here is the data on small business credit conditions:

  • 31% of small businesses borrow once every three months, a higher reading than the previous three years.
  • While an improvement from March, 6% of borrowers reported having a more difficult time obtaining their most recent loan compared to three months ago.
  • 30% of small businesses said all their borrowing needs were met, the highest reading since September 2020.
  • 2% of small businesses’ borrowing needs were not met in April.
  • A majority of small businesses did not want a loan in March with 59% reporting disinterest.
  • 8% of small businesses are expecting credit conditions to worsen in the next three months.
  • The average interest rate small business borrowers are paying on short-term loans is 8.5%, an increase of 0.7% and the highest reading in years.
  • More than a quarter of small business owners are paying a higher interest rate on their most recent loan, unchanged from March.
  • 4% of small businesses claimed that financing and interest rates are the single most important problem for their business.

NFIB Small Business Economic Trends April 2023