Businesses in Wicomico County are facing cash flow challenges due to the Federal Reserve’s decision to keep interest rates at 7.9%, despite expectations of a rate cut. This decision was made because the US did not achieve less than 2% inflation across the country, according to Salisbury Area Chamber of Commerce President Bill Chambers.
Many businesses were hoping for bridging loans and lines of credit to expand their workforce for the seasonal demand, but this decision is making it harder for them to secure financing options. The hospitality, restaurant, and entertainment sectors are particularly affected by this decision, especially after seeing a decline in spending due to inflation in recent years.
Chambers highlighted that the fixed interest rates of 7.9% are impacting the short-term rental market in vacation destinations like Ocean City, where condo rentals come with high interest rates as well. With interest rates remaining steady, refinancing options for small-scale landlords are limited, leading to potential financial losses.
Chambers is hopeful that the Federal Reserve will reconsider their target inflation rate from 2% to 3%. He believes that lower interest rates would allow consumers to spend more money on goods and services, which would help businesses recover from economic challenges they are currently facing. Chambers emphasized the importance of lowering interest rates for businesses to thrive and recover from these hardships.
