Sample Essay – Federal Fund Rate
The Federal Fund Rate has also risen to 1.5%, and now there is a credit freeze, as financial analysts call it. Small businesses, as a result, have faced the crunch even more because of the increase in the cost of capital. Interest rates are also rising, which has dampened the spirits of many investors since 70% of loan officers, according to a survey, have reported that the interest rates are increasing enormously, and small investors are feeling the crunch badly.
This increase in rates is again record-breaking as a result of a survey. The loan spreads are being lowered as a result as according to a survey 30% of loan officers during 2007 claimed to be lowering the spread which confirms the widespread effects of the credit crunch.
The financial crisis and economic slowdown have been placed at 2, the second most important factor in the economic reasoning to answer the question. Since credit availability is an issue and unemployment is increasing continuously thus starting up a business is a bad option in the slow economy since everyone feels the credit crunch.
Many surveys confirm the concern over the credit crunch situation in the slow economy. 63% of small businesses are suffering from the credit crunch, according to a survey. Thus, the conditions are beginning to get tougher for small and new businesses (SBA, 2009).
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