Banks offer tools and advice to help small businesses deal with inflation

Inflation rose even more than expected. According to the US Bureau of Labor Statistics, the consumer price index, which measures the cost of everyday goods and services, rose 9.1% in June from the same month last year. last. The increase is the largest since November 1981.

Already weary after two years of COVID-19 closures and restrictions, hiring difficulties, rising interest rates and supply chain issues, small businesses now face higher prices for the goods and determine how much of the burden they should pass on to their customers.

Chi Eze, vice president, director of small business bankers for Bank of America. (photo sent)

“Like most changes in the economy, rising interest rates produce ripples that can impact the bottom line for business owners,” said Chi Eze, vice president, director of small business bankers. businesses for Bank of America in Owings Mills. “Higher interest rates lead to more expensive loan repayments, so it’s important for business owners to carefully consider their long-term cash flow and budgetary needs when considering funding sources.”

Hasan Mannan, corporate banking market manager at JPMorgan Chase & Co., said a number of factors affect small businesses and it’s important to look at the big picture.

“The cost of doing business, to be honest with you, has just gotten more expensive and it’s starting to put a strain on the bottom line of even the most profitable and well-run businesses,” he said.

In a Bank of America survey of small business owners conducted in March and April, nearly 90% said inflation was a major challenge.

“I think what’s happening in the rates market is that it’s really forcing business owners and our clients to pause, reflect and honestly and better analyze what they plan to use their capital,” said Jason Weisberg, senior vice president. President and Corporate Banking Team Leader for Greater Baltimore at M&T Bank.

Banks in the region are helping their small business customers in a number of ways in the higher rate environment.

“At M&T, our philosophy is really about banking relationships and finding longer-term goals,” Weisberg said. “As we meet with clients, one of the main things we talk about and hear about right now is the higher inflation rate.”

Weisberg said M&T is working to understand the impact of higher rates on customers.

“Each business is unique in what it is in its life cycle,” he said.

Bank of America’s Eze said the bank provides small business customers with guidance, tools and resources to navigate tough markets.

“Our small business specialists provide advice specific to business owners’ unique goals and priorities,” she said.

Bank of America recently launched Start a Business Center, a digital resource that provides small businesses and aspiring business owners with business plan templates and information on legal business structures, marketing strategies and options. funding, among other topics.

JPMorgan Chase & Co. continues to open branches not only as a place to process deposits and withdrawals, but also as a resource center, Mannan said.

“If you’re a small business owner and…you just don’t know what’s available to you, you’re welcome to come to one of the branches and we’ll sit there and walk you through all the opportunities. and the choices you might have,” Mannan said.

When discussing inflation, banks look beyond short-term impacts to help small business customers prepare for the long term.

Weisberg said M&T works with its customers to assess their long-term goals. He posed the situation of a company facing a lease renewal and a steep rent increase.

“Now may be a great time to assess their longer-term plans and possibly buy a property to help solve some of their real estate or operational costs, like having space to run their business,” he said. -he declares. “We can certainly help assess their finances and understand their longer term goals and provide capital for what this project might be.”

Bank of America’s Eze said banks can help business owners by providing tools that make it as easy as possible to view and manage key aspects of their business, as well as credit options to meet financing needs. Small business specialists can also provide advice to help small business owners manage the impact of inflation, from reviewing business plans to customer retention strategies to identifying potential sources of income.

Looking to the long term, JPMorgan Chase’s Mannan said he wants to explore how well-equipped a company is to take advantage of the market once interest rates come down.

“We’re seeing more and more talk about mergers and acquisitions and how companies become more efficient,” he said. “Do they need to inject assets and increase their production of products? Things of this nature are the conversations you need to start having now, because planning takes time.

Mannan stressed that small business owners need to understand what is happening in the global, national and local realms and that they speak to experts.

“It will take some time to plan, so my view is to start thinking about what you have in place for the next 12 to 16 months, and then how well equipped are you to leverage that advantage a once the market turns,” he said.