I was recently reading that interest rates and payments were crippling small companies.
Just how much costlier is credit these days? Small firms are paying 9.1% on average, per the National Federation of Independent Business.
In 2019, the prime rate, the benchmark rate for loans to small borrowers, was 5.5%. Now, it’s up to 8.5%. This may be an understatement.
Owners of the smallest businesses often depend on credit cards or personal loans, which carry rates.
far higher than corporate bank loans usually do. Interest costs are nearing 7% of revenues for small-business borrowers. In 2021, they were 6%. If rates hold steady, the figure will hit 8% by 2030.
Banks are only coming though with 13% of loan applications approved. So, personal juggling is a necessity and will continue to be needed.
Most entrepreneurs utilize their HELOC first before going to credit cards. The rates are much more favorable.