Shark Tank star and O’Leary Ventures chairman Kevin O’Leary is sounding off on the impending “crisis” that lies ahead for small businesses.
O’Leary recently sat down on FOX’s The Big Money Show to talk about Federal Reserve interest rate hikes and what it could mean for the future of financing for small local businesses.
In May, the Fed instated a 25-basis-point rate increase, which put the target rate range at 5% to 5.25% — the third 25-basis-point increase in a row this year.
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“These rapid rate hikes that have occurred, [the] unprecedented speed of these hikes, have put my small businesses [in crisis], and I’m talking about companies with five to 500 employees, which represent over 60% of our economy,” O’Leary said on the show. “If you’re in the S&P 500, you have no trouble financing your business. You can’t say that about small businesses anymore. The cost of capital has gone through the roof.”
Kevin O’Leary testifies during the Senate Banking, Housing, and Urban Affairs Committee hearing titled Crypto Crash: Why the FTX Bubble Burst and the Harm to Consumers. (Getty Images)
O’Leary also touched on the most recent National Federation of Independent Business (NFIB) report, which was released Tuesday and showed that small business optimism reached a seven-month high in June.
The Shark Tank star was still not impressed.
“I’m not listening to that data, I’m dealing with reality,” he said bluntly, mentioning that he’s been talking to small business owners and CEOs around the country. “We’ve got a real crisis coming here; there’s no cash for small businesses. And when the Fed raises rates another 50 basis points, that’s going to make it worse. So no, I’m not happy.”
O’Leary suggested that small businesses apply for the employee retention credit as inflation continues to loom, a tax credit that was first implemented during the pandemic and is meant to encourage employers to retain employees and keep them on the payroll.
O’Leary recently gave his opinion on the future of work and took a firm stance that forcing employees to come back into the office full-time is detrimental to business.
“The economy has changed radically,” he said on FOX’s Outnumbered last month. “The problem with saying everybody has to work in the office is you won’t be able to hire the best talent.”
O’Leary’s estimated net worth as of Wednesday morning was $400 million.