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06-15-2022, 08:27 AM #14
- Join Date
- Mar 2015
- Location
- Boynton Beach
- Posts
- 3,481
My Take:
Yes, we may enter a recession due to inflation and the fed raising rates to curb spending. The challenge to this is to stifle the right group of spenders. There is still a LOT of dry power capital in many forms in the market and health balance sheets of large companies. The smaller companies and lower income individuals are the ones whom might get hurt. What is also troubling is the fast cycles of the economy. It is making it extremely difficult for lower middle market businesses to plan and ultimately they will react to situation instead of getting ahead of them.
Rising interest rates will have an adverse affect on the finance company community:
-Yes-smaller companies may default.
-There are already a lot of lower middle market company problems within banks that have not been pressured to leave ......yet.
-Interest rates rising for banks that are deposit heavy eats into net income unless they deploy loans.
-Finance companies that are pricing deals on factor rates or discount rates and have been aggressive on pricing are going to get squeezed as their credit facilities are tied to Prime or other metrics. You may see some small finance companies ask clients to leave because they are losing money on deals they priced too cheap the last 12-24 months.Kevin Henry
VP-Business Development
Seacoast Business Funding, a division of Seacoast Bank
561-850-9346
Kevin.Henry@SeacoastBF.com
1880 N Congress Ave., Suite 404
Boynton Beach, FL 33426
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