The Latest Challenge – Rising Interest Rates
Until more recently, the Feds have been keeping the interest rates at an all-time low. Lately we have seen those numbers, those outside of the control of the Fed, beginning to creep back up again. Should we worry?
According to Fed Chairman Ben Bernanke, things are improving, but we still have a long way to go. We are still facing challenges according to Bernanke, with high unemployment that ultimately affects everyone. The country is on track for improvement in the long term, although the Feds are still monitoring the economic conditions in order to insure a return to a prosperous economy.
According to the Open Market Committee which met recently, we are experiencing an uneven recovery. Consistent with this comment and one made by Ben Bernanke that the US job market is still weak despite gains, a local San Diego paper carried an article saying that the job market was flat in February, showing no decrease in unemployment for the previous month, but down by one point from a year ago.
Early Monday morning, before the market opened, The Federal Reserve Chair came out with a reminder that the economy is still vulnerable and he did not discount the possibility that the Feds might take additional action. Bernanke, always concerned about a weak labor market said that the economy needs to grow faster if it is going to create enough jobs to reduce unemployment.
So back to the original question, some interest rates are rising, should we worry? Rising interest rates will make it hard for the majority of small businesses to get loans. With the economy having gone south for so many years, very few small businesses have the stellar credit it takes to get a traditional bank loan, and with interest rates on the rise, even fewer small merchants will have access to the funding they to expand and hire new employees. Small business owners have been responsible for the majority of the hiring in the private sector, but, with limited access to capital, can this continue? Ben Bernanke has always maintained that lowering the unemployment statistics is germane to a healthy economy. With the situation as it is, will he implement QE3? We will have to wait and see!
For small business owners who wants to take advantage of low cost of borrowing, now would be a good time to secure funding if you can qualify before rates starts to go up.
If you need help getting small business loans, lease or working capital, Liberty Capital is always ready to help.