CONTINUE TO SITE »
or wait 15 seconds

Bank / Credit Union

Banks boost prime lending rates to highest rate since 2008 crisis

Banks boost prime lending rates to highest rate since 2008 crisisImage via Istock.com


Banks have boosted their prime lending rates to the highest level since just prior to the financial crisis of 2008, following the Federal Reserve's decision to raise rates by .75% as a method to reduce inflation, according to a report by CNBC.

Several banks have followed suit, with Fifth Third Bank, Regions Bank and Citizens Financial Group raising their rates from 5.50% to 6.25%, according to multiple press releases.

However, this move may make it more difficult for small businesses, who fill find it harder to meet these higher interest rates, while dealing with higher labor, goods and transportation costs.

"Demand for lending hasn't changed yet, but we're getting dangerously close to where people will start to second guess," Chris Hurn, founder and CEO of Fountainhead, which specializes in small business lending, said in the report. "We're not there yet. But we're closer."

In addition, this likely won't be the last time the Feds raise rates. If the Feds raise rates twice more, small business loans may reach 9% or higher.

The situation today is different than in 2008 as unemployment is lower and ledger balance and corporate balance sheets are stronger.

"We're just running into a slowing economy," Hurn said.

If these measures do bring down inflation, it could balance things out for small businesses. However, it is uncertain how quickly this will occur, since these rates will impact both cash flow and monthly loan payments.

"People will continue to borrow, but whether they can borrow at inexpensive rates, or even get capital trying to borrow from traditional sources, remains to be seen," Hurn said.


KEEP UP WITH ATM AND DIGITAL BANKING NEWS AND TRENDS

Sign up now for the ATM Marketplace newsletter and get the top stories delivered straight to your inbox.

Privacy Policy

Already a member? Sign in below.

  or register now

Forgot your password?


You may sign into this site using your login credentials
from any of these Networld Media Group sites:

b'S1-NEW'