Federal Reserve’s Policies Could Be Boon to Small Business

For some time now, the Federal Reserve Board has been buying a significant number of bonds every month – tens of billions of dollars’ worth – as a means of artificially depressing interest rates seen nationwide to drive up affordability and combat inflation. However, the central bank is starting to taper this activity, and some experts believe that the wind-down of such an initiative will behoove small businesses going forward.

The Fed’s taper of its bond-buying efforts is already under way, and some experts point out that it might have helped small businesses to boost employment numbers, and potentially see larger revenues, according to a report from the San Diego Union-Times. The latest data shows that employment continued to tick up slowly but steadily in March, continuing a trend first observed in October. Moreover, recent polls seem to indicate that small business owners are feeling good about their ability to hire overall, particularly where full-time workers are concerned. That may serve as an indicator of much better feeling about the state of their companies.

Perhaps the largest reason that the Fed’s taper efforts might be good for small businesses hasn’t even fully arrived yet, the report said. Some experts believe that the ultimate impact, on small businesses in particular, for these types of firms came in the form of significantly tightened credit standards that made it difficult for any smaller companies to obtain the type of credit they might have needed to grow. As the Fed’s taper continues, it’s therefore likely that they’ll have freer access to financing they may need to succeed down the road.

Is it already under way?
The good news for small business owners is that the most recent data from the U.S. Office of the Comptroller of the Currency recently highlighted that commercial and retail borrowers faced easier credit standards over the course of the year ending June 30, 2013, and likely continues to move in that positive direction. In addition, with the overall economy improving so steadily, more customers seem to be coming through the doors, thereby enabling a stronger and more sustained recovery for many such companies.

Owners who want to do even more to shore up their bottom lines in the coming months might also want to think about the ways in which they can cut their expenses, such as by finding more affordable small business insurance. Reducing costs for such coverage, including liability insurance, may save such a firm thousands of dollars per year.