America’s small businesses struggle to access capital. Here’s what the Fed’s rate hike means for the communities I took a 6,000-mile trip across the country to visit



The health of the economy—and of our small businesses and communities—is difficult to measure, let alone predict. As of this writing, the Federal Reserve has committed to raising interest rates even higher as we approach their next meeting in September, a sign that inflation may continue. But the labor market remains resilient, a sign that businesses believe inflation will moderate.

While access to capital will fluctuate as interest rates rise, America’s small business community will remain ambitious and resourceful despite the challenges. I am confident because I recently saw it first hand.

In the midst of the economic transformation caused by the pandemic, it took me eight months to tour eight cities. Driving over 6,000 miles, from Chicago to Baltimore, from Cleveland to Cumberland, Maryland, I was amazed by the stories of American tenacity.

But with each story, it became clearer that persistence alone won’t save small businesses. This requires a complete rethinking of the way we build solutions to create new opportunities to generate wealth.

The pandemic has exposed and exacerbated the difficultieswith

In 2020, each day of the pandemic reveals more uncertainty than the last. Businesses were closing at historic levels, communities were suffering from catastrophic levels of unmet need (from food insecurity to education disruptions), and people were losing hope.

I had spent my entire career trying to enrich communities, celebrate small businesses and give back. Yet I watched as our own communities and institutions destabilized and became more vulnerable to the ramifications of unprecedented chaos.

One day I realized that instead of sitting on the sidelines, talking to the people and communities most affected would be critical to restabilizing and revitalizing America’s communities. Step one: Hit the road.

Put an ear to the ground

I hit the road with my cousin (and now co-founder) Warren Reed to really gauge the state of America’s small businesses and communities amid the cataclysm.

In just a few short weeks, it has become increasingly clear that without intervention, the outlook for America’s small and medium-sized businesses will remain bleak. And the lack of opportunity for success was the culprit.

As we walked from town to town, business to business, the pain on the faces of those we spoke to was a common thread. The stories of lost jobs, families hanging in the balance, and business owners losing the companies they worked their entire lives to build began to tell a bigger story.

For every report that came out about the eventual closing of over 100,000 businesses or how Americans were struggling to pay their rent, we had a face, a name, a voice to represent it. We saw the pain and confusion written on their faces. We heard the frustration and despair in their voices.

These sentiments echoed everywhere we went. As Warren and I discussed what kind of solution could best uplift business owners, transform communities and create broad opportunities, we couldn’t ignore what we heard from a leader in Cumberland: “We are a city of multi-generational families. We educate our children, but what good is education if there is no work? Businesses come for tax breaks, but there is no personal investment in our people. How are these families expected to survive, how are our community expected to thrive without a sustainable local economy? No one seems to be able to be persuaded to help us create one.

We knew that if we used what we learned from the journey as core truths to guide the construction of our solutions, we could replace those feelings of frustration with affirmation and support and, most importantly, opportunity.

Removing barriers will enrich communities and grow our economy

Based on our conversations with small business owners, community members, and local leaders across the country, we’ve identified three key issues we must collectively address to revitalize America’s communities:

Poor circulation of capital is the root of stagnation

After eight months, eight cities and 6,000 miles, it became clear that the poor flow of capital in our communities and the disparities between communities’ access to capital are national problems. In 2020, over half of small businesses had unmet financing needs. Without capital, businesses cannot start, grow or create jobs.

The longer the Federal Reserve keeps interest rates high, the more severe the damage to American business. While it is important to use every investment tool and policy tool to fight inflation and reintroduce capital to the markets, we must find a balance between overall economic impact and community impact. Otherwise, both will continue on a bumpy road.

Improving economic conditions in distressed communities is not an “urban” problem, but an American one

The poor circulation of capital reverberates through communities – limiting the potential for progress and sustainable development. Meanwhile, the prevailing assumption is that access to capital is a problem only for cities.

In fact, over 52 million people live in distressed communities or opportunity zones across the country. It only takes one look at HUD’s Opportunity Zones Map to see that access to capital is as important to America’s heartland as it is to urban or coastal cities.

The way forward? Allocate capital to these communities through public and private sector programs and ensure it stays there through innovation, economic and workforce development, and small business promotion.

Innovation will accelerate progress

American businesses and communities face growing challenges such as economic disparity, inflation, and growing areas of unmet need. Every day without access to capital is another day of lost jobs, financial instability and communities cut off from opportunities for growth.

If we want to not just bring capital to communities, but set them up to thrive in the near future (rate hikes or not), we need to invest in scalable, technology-based solutions that can deliver immediate economic and societal impact there , where needed, when needed. Honestly, there is no other option.

Randy Garrett is co-founder and president of OppZo.

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