Small businesses seek to avoid possible credit crunch as Federal Reserve raises rates once more

Small businesses – the heartbeat of the U.S. economy – are beginning to feel the pinch of tighter credit conditions as the Federal Reserve continues to increase borrowing costs.

flurry of headlines in recent weeks has suggested a credit crunch – meaning the availability of lending gets scarcer – is already happening.

That’s in large part brought on by the actions of the Federal Reserve, which has been raising borrowing costs for companies and consumers for over a year in an effort to tame inflation and lifted rates by another quarter point on May 3, 2023. Concerns about the availability of credit have also risen as a result of a spate of bank failures, including that of First Republic on May 1.