Small Business Borrowing Amid Fed Rate Hikes
The Federal Reserve, aka The Fed, is the main governing body over the United States economy. Currently headed by Jerome Powell, the Fed’s main job is to control the supply of money in the economy through various policies, along with accomplishing primary objectives like controlling inflation and maximizing employment. Perhaps its most powerful tool in influencing the economy is its ability to manipulate the Federal Funds Rate, which impacts everything from yields earned on savings accounts to credit card interest and beyond. The FFR also influences the interest charged to both individuals and companies when borrowing funds.
The Fed raises the FFR with the goal of increasing short-term interest rates, and vice versa when lowering the benchmark. During the Covid-19 pandemic, when the economy abruptly came to a halt for several weeks, triggering all sorts of repercussions that are still being felt, the Fed lowered the FFR to 0% in an attempt to soften the blow by increasing the likelihood that lenders would be repaid while borrowing would still be feasible for those seeking funds.
Implications of the Fed Rate Hike
Since that move was made, thanks in part to the fallout from Covid-19 as well as lingering supply chain jams and the war in Ukraine, inflation has picked up at an alarming pace. In an effort to tame inflation, the Fed has made it clear that the next step is to begin raising the FFR rate in a series of hikes over the coming months. The plan the Fed has outlined would represent one of the most aggressive raises on record and has sent shockwaves through the stock market since it was made public. After all, a higher FFR means companies both public and private will face more challenges related to growing their bottom lines, while the other aforementioned issues are still impeding gross sales.
While a higher FFR affects those seeking funds through traditional banks, MobyCap has secured resources that will dramatically lower the cost of capital for all clients funded through our in-house bank. Our commitment to securing the most beneficial funding options for our clients never stops, and in the face of challenging macro-economic conditions, we feel it is even more necessary. What’s more, these enhanced options won’t slow down our streamlined process at all, as we can still present offers within hours of underwriting and offer funding within 24 hours in many cases. Along with these lower rates, MobyCap continues to add innovative, customizable options which enable us to help a wider array of small businesses.
Because there is no hard credit pull or obligation needed to underwrite, you have nothing to lose and much to gain if your business could benefit from an influx of working capital as we head into the summer months. After all, even if you don’t plan on borrowing funds in the immediate future, it never hurts to know what options are available should the need arise. The last few years have shown us just how unpredictable the economy can be, and that significant swings can occur even when the Fed announces correctional measures.
Don’t hesitate to call (737) 577-1180 or submit your information through our Contact Us page to explore your options with one of our experts. You can also simply Apply Now, if you’d like to expedite the process. Thank you, we look forward to the opportunity to work with you as we continue our mission to support as many small business owners as possible!