April 11, 2023 -NEW YORK (AP) — When Nat West, owner of cider-making company Reverend Nat’s Hard Cider, decided to supplement his wholesale business by opening a taproom in a bustling neighborhood in Portland, Oregon, he thought getting financing would be a breeze.
After all, he was only seeking $50,000, has been in business for 11 years, and takes in more than $1 million in annual revenue.
In February and March, West reached out to three lenders he had previously gotten financing from, including one where he has an existing line of credit. To his surprise, he was rejected.
“I feel like it’s really weird, it’s such a small amount of money for a business that has so much ongoing, sustained revenue and has been in the same community for a long time,” he said.
West isn’t alone. Borrowing for small businesses was already constrained due to rising interest rates. Following the recent collapse of Silicon Valley Bank and Signature Bank, some lenders – particularly the small and midsize banks that serve small businesses — may be forced to tighten credit further, since they’re seeing an outflow of deposits, which means they need to retain capital. And banks are being more cautious in general due to uncertainty about the economy.