Rising interest rates could hurt small business owners

Businesses could face financial heat as the inflation increases, Sharon Danquah reports.
Published: Sep. 21, 2022 at 8:11 PM CDT
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NASHVILLE, Tenn. (WSMV) - The Federal Reserve has announced a 0.75% increase in interest rates in an effort to fight growing inflation, but it may hurt small business owners.

Local business owners said they are already struggling.

The owners of Voodoo Gumbo said they are seeing prices more than double for ingredients and supplies and increasing interest rates may only make their situation worse.

For more than five years, Herb Tassin said he and his brother have been serving up New Orleans-style gumbo, mixing spices, meat and seafood. All ingredients Tassin said now cost more than they did two years ago.

“Prices of food have really been something to see. Things as simple as butter and chicken have almost doubled in price,” Tassin said.

The cause, rising inflation, is an issue the Federal Reserve has been fighting for months with increased interest rates. Now leaders have raised the interest rate to more than 3%, making it more expensive to take out a loan in hopes of lowering inflation. But that means small business owners like Tassin have fewer options as they struggle.

“We don’t have the buying power to leverage lower prices like larger businesses do and so we are much more susceptible to fluctuations and changes from month to month in the cost of our goods,” Tassin said.

Selling seafood is becoming much harder.

“We are a New Orleans-based restaurant. Our fried oysters are very popular and for years we’ve paid $65 a gallon for fresh Gulf Coast oysters. Now we pay well over $100,” Tassin said.

As leaders fight to bring down inflation, Tassin said they’re just doing what they can with what they have, hoping it will be enough.

“We are just crossing our fingers,” Tassin said.

Small business owners said they are just praying and hoping prices come down soon.