Kevin O’Leary, the well-known investor and Shark Tank star, is voicing his concerns about the impact of the Biden administration’s economic policies on small businesses in America.
As inflation rises and interest rates surge, O’Leary believes that small businesses have been overlooked, while big corporations have reaped the benefits of legislation like the CHIPS Act and the Inflation Reduction Act (IRA), signed into law by President Biden last year.
In a recent interview on Fox News, O’Leary expressed his worry about the allocation of funds, stating that most of the government’s spending has favored S&P 500 companies, which represent only 40% of the economy. While acknowledging the significance of these corporations as major employers, he emphasizes that small businesses are being adversely affected by the aggressive rate hikes and ongoing inflation policies set by the Federal Reserve.
O’Leary points out the unintended consequences of these policies, particularly how small businesses are struggling to access capital due to soaring interest rates. He mentions a specific example of a small business owner in Champaign, Urbana, with 58 employees, who has seen his cost of capital skyrocket from around 6-7% to a staggering 20%. Regional banks have also become hesitant to lend to such businesses while they await new liquidity rules.
Although the Consumer Price Index (CPI) has seen a decline, O’Leary highlights that core inflation, which excludes food and energy sectors, remains high and has severe implications for entrepreneurs and small businesses. He believes this could have political repercussions and emphasizes the urgent need to support and save small businesses. O’Leary stresses that access to capital is crucial for their survival.
According to him, this problem is relatively recent, only becoming apparent in the last six to eight weeks. Small businesses with a workforce ranging from five to 500 employees are finding it nearly impossible to secure funding, which he deems to be poor economic policy. O’Leary attributes this situation to the administration’s singular focus on big corporations, neglecting the vital interests of smaller enterprises.
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