MECKLENBURG COUNTY, N.C. — It's been a difficult year for businesses and households looking to borrow money, and that environment isn't getting any better. With the recent closure of three U.S. regional banks over the last 30 days, and the Federal Reserve raising interest rates has created a lean lending environment.
The banking sector is on shaky ground after First Republic, Silicon Valley Bank and Signature Bank all closed in the last month all while the Fed continues its war path on inflation.
Alphonso Ogbuehi, dean of the College of Business and Professional Studies at Johnson C. Smith University, told WCNC Charlotte that banks have tightened lending opportunities across all loan categories with anxiety over which shoe will drop next.
"This environment has created uncertainty in the minds of depositors," Ogbuehi said. "These banks are expecting more from borrowers and haven't seen it. I hate to say it, but easy money is a thing of the past now it seems."
With economic uncertainty on the minds of many, including banks, the financial system has a reduced appetite for risk.
"The Federal Reserve is increasing the rates which is helping to decrease buying power," Shivam Patel, owner of Patel Standard Realty, said.
Patel said he's had clients who have wrestled with the climate and finding loans.
Despite the economic outlook, financial educator and teacher Brian Li explained that if you pay down debt and work to up your credit score, a lender may be more apt to give you a loan.
"Paying down credit cards is a critical factor," Li said. "You should really try to lower that credit utilization also and pay down any existing balances on credit cards."
The Federal Reserve isn't looking to lower rates until next year, it seems, and experts believe the tight loan standards across loan categories won't change either.
Contact Colin Mayfield at cmayfield@wcnc.com or follow him on Facebook, Twitter and Instagram.