Remember NJ's "sugar high" when Trump cut taxes? Nothing of the sort happened. In fact, the very opposite happened.
The real sugar high is now here. Courtesy of the left.
https://thehill.com/opinion/finance...e-skyrocketing-and-thats-only-half-the-story/
The prime rate (the rate that banks charge their best customers) is now at 8.25 percent. My typical client — a small or mid-sized business — normally pays 1 to 3 percentage points above that, assuming they qualify for financing at all. So the cost of capital has skyrocketed for them, and it’s causing them to pull back on spending and investments.
I have other clients, primarily startups and emerging companies, that are finding it very hard now to get loans. And it’s not just my client base having this problem: bank loans and approvals to small businesses through April have “plummeted” according to recent monthly data from fintech company Biz2Credit.
“While it is good news that people are working, the tight labor market hurts the bottom line for small businesses,” said Rohit Arora, the company’s CEO. “Companies that need working capital to pay their bills are paying a higher cost of capital for it. This combination puts stress even on small businesses that are thriving. It’s a Catch-22 situation right now.”
What’s more, all the COVID cash, including SBA loans, grants and tax credits, are now expired or winding down. So the companies that were riding this cash in the hopes of catching a better wave are now out of luck.
All of this means that the bankruptcy numbers above are unfortunately only half the story. These numbers are from surveys and court filings and only include those companies that have gone through the trouble of officially declaring bankruptcy. If you look closely at these companies, you’ll see that they’re pretty large — at least large enough to be able to afford expensive bankruptcy attorneys and stave off their creditors for a potential reorganization. But what’s not included are the countless small businesses that are also likely failing right now.
The real sugar high is now here. Courtesy of the left.
https://thehill.com/opinion/finance...e-skyrocketing-and-thats-only-half-the-story/
The prime rate (the rate that banks charge their best customers) is now at 8.25 percent. My typical client — a small or mid-sized business — normally pays 1 to 3 percentage points above that, assuming they qualify for financing at all. So the cost of capital has skyrocketed for them, and it’s causing them to pull back on spending and investments.
I have other clients, primarily startups and emerging companies, that are finding it very hard now to get loans. And it’s not just my client base having this problem: bank loans and approvals to small businesses through April have “plummeted” according to recent monthly data from fintech company Biz2Credit.
“While it is good news that people are working, the tight labor market hurts the bottom line for small businesses,” said Rohit Arora, the company’s CEO. “Companies that need working capital to pay their bills are paying a higher cost of capital for it. This combination puts stress even on small businesses that are thriving. It’s a Catch-22 situation right now.”
What’s more, all the COVID cash, including SBA loans, grants and tax credits, are now expired or winding down. So the companies that were riding this cash in the hopes of catching a better wave are now out of luck.
All of this means that the bankruptcy numbers above are unfortunately only half the story. These numbers are from surveys and court filings and only include those companies that have gone through the trouble of officially declaring bankruptcy. If you look closely at these companies, you’ll see that they’re pretty large — at least large enough to be able to afford expensive bankruptcy attorneys and stave off their creditors for a potential reorganization. But what’s not included are the countless small businesses that are also likely failing right now.
