Alternate ways to find the capital you need as the money supply tightens.
This article was originally published for Inc. Magazine, read the full piece here.
With inflation skyrocketing to 8.5% since last year, the Federal Reserve is expected to continue to raise interest rates aggressively in the coming months, likely increasing the federal funds rate to over 2% by the end of 2022. Increased rates will make it even more expensive to borrow money, especially for small business owners.
The reality is that many small businesses are often not deemed "creditworthy" by traditional lenders. For a lot of small business people, the answer will be the same as it has for decades: Borrow against existing assets, in many cases the business owner's house, and use that to finance ongoing and expanded operations.
Another option is crowdfunding debt, issued by companies including my own, SMBX. In this scenario, business owners retain 100% ownership. Investors purchase bonds for as little as $10 and are repaid monthly for loaning money to the business. This approach lets business owners secure fixed rate debt. (Read more)