Nearly two years post Covid, small business owners are now accustomed to a new business environment, but most experts predict that a period of stagflation and recession may continue, and the pain could extend far into 2023. Nothing new here as small businesses for the most part have been dealing with uncertainty since Covid lockdowns in 2020. With challenges finding employees post pandemic in 2021 and 2022, continuing supply chain issues, increased costs of everything, business owners who were still in business entering the year of 2022 had the cards stacked against them. 2022 was most notably defined by record high inflation, in effect making goods more expensive. With the lower purchasing power of the dollar, ‘less for more’ is now the ‘new normal’ that small businesses (and consumers) will deal with for a while. 

With no surprise, going into 2023, the top concern of American small business owners is the status of the economy. 

Highest consumer inflation in 40+ years

As record high inflation was becoming apparent (for most), small business owners had to react to higher than normal COGS. What would have been considered margin losses were transferred to consumers by raising prices, to protect business profits. However, this doesn't mean that small businesses remain unaffected by the inflation spike. Higher costs are everywhere and on everything, including operational expenses to run your business. This coupled with potentially lower consumer confidence means businesses are looking for volume, repeat customers.

High Mortgage Rates

The average mortgage rate for a 30-year fixed is 6.37%, more than double its 3.22% level at the start of 2022. Potential buyers have been pushed out of the affordability spectrum as interest rates continue to soar. Inflation, recession and higher rates make for a ‘buyer’s market,’ especially with a large inventory of available homes. Mortgage companies are pulling back on expected fundings as the housing market softens.

Recession Looming as Fed Raises Rates to Relax Inflation

Banks are outspoken in their predictions of an unshakable recession. Factually, the US has been in a recession for the last 3 quarters of 2022.

With a recession imminent, how do small businesses prepare?

As Covid-19 began to sweep the nation’s business owners, it became clear that businesses were going to borrow money to survive. A lot of businesses could not operate due to limited funds. American businesses had maybe a couple weeks of cash reserves available to operate and sustain their business. Coupled with much lower-than-expected customers, the access to capital became more important than ever. 

While Covid-19 was not an optimal time for business owners, innovation, growth, and American values kept the economy going. With the incoming recession, again business owners are anticipating less customers, consumers or businesses to pay your costs while having to maintain costs such as rent, staff, and inventory. Without relying 100% on money coming in, the ability to borrow money once again will determine if your business will survive or not.

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Given all the unknowns of what is down the road, here are the 2 best financial products for a small business in 2023:

-SBA light document 10 year term loan.

-Revolving Line of Credit (Bank Program and Bank Endorsed Program)

We are seeing unprecedented applications for credit, so we urge business owners who are seeking a quote to apply first, so they can then talk about the real options available to them…all with the trusted guidance from a dedicated loan officer and underwriting team.

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