Corporate News

In A Toughening Economic Climate, Relationships Are King

Ziv Biron, IDB President & CEO, for Forbes Leadership Council

December 7, 2023

As we continue to move through the second half of 2023, the U.S. economic outlook remains tepid at best. While the effects of an uncertain global financial ecosystem have been widely felt, small and midsized businesses across most major industries have found themselves among the hardest hit. As business owners and leaders work to again safeguard operations from a second challenged economic cycle in just a few short years, they face compounding pitfalls at the intersection of rising operating costs and tightened financial conditions.

As businesses face complex and unique challenges, strong and long-standing banking relationships may mean the difference between survival and failure, creating opportunity for dynamic collaboration and personalized solutions that may not otherwise exist.

It's more than just a story of Wall Street meets Main Street.

While our economy has remained remarkably resilient for the time being, the convergence of economic pain points and troubling world events has created prolonged anxiety across global markets.

Domestic financial institutions have been forced to respond to this new normal, buttoning up operations in the face of rising interest rates, stubborn inflation, volatile labor markets and growing conflict overseas. According to a recent survey conducted by the Federal Reserve, many domestic banks in the U.S. have tightened standards for commercial and industrial loans, citing concerns about liquidity and funding costs.

These new financing standards have left many small and midsized businesses with limited access to critical cashflow and even more limited places to turn to for solutions. Exacerbating this reality, certain industries continue to face pronounced and prolonged disruption, making already nervous lenders increasingly resistant to new business.

This piece was originally published with the Forbes Leadership Council. Read the full article here.