Just when it seemed impossible for things to get tougher for small businesses, the federal government decided to make things worse.
Small businesses have had a tough run for the last few years. Record inflation, high interest rates, and workforce shortages have led to widespread pessimism among small businesses. The last thing they need is more government interference, but that is exactly what is happening.
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In recent years, mid-sized companies between $100 million and $750 million in yearly revenue have been increasingly struggling compared to large businesses, taking the brunt of poor economic conditions and high interest rates, according to asset manager Marblegate.
From 2019 to the end of 2022, mid-sized companies had a 24 percent drop in earnings before interest, taxes, depreciation and amortization (EBITDA) compared to public companies, which had their earnings rise 18 percent, according to a study by Marblegate acquired by Axios. The discrepancy between large and midsized companies is in part due to the increased cost of credit for smaller businesses, which are more affected by the Federal Reserve’s interest rate hikes, with the federal funds rate currently being placed in a range of 5.25 percent and 5.50 percent, the highest point in 22 years.
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