America’s small businesses are struggling to access capital. Here’s what the Fed rate hike means for the communities I made the 6,000-mile trip across the country to visit.

The health of the economy – and that of our small businesses and communities – is difficult to gauge, let alone predict. As of this writing, the Federal Reserve is pledge to increase the rate even higher as we move towards their next meeting in September, a sign that inflation may persist. But The job market is still recoveringa sign that businesses think inflation will calm down.

While access to capital will fluctuate as interest rates rise, America’s small business community will remain ambitious and resourceful through adversity. I’m confident because I recently saw it with my own eyes.

At the height of the economic transformation caused by the pandemic, it took me eight months to tour eight cities. Driving more than 6,000 miles, from Chicago to Baltimore, from Cleveland to Cumberland, Maryland, I was amazed at the stories of American perseverance.

But with each story, it becomes clear that persistence alone will not save small businesses. It requires a radical rethink of how we build solutions to create new wealth creation opportunities.

The pandemic has revealed and exacerbated difficultiesS

In 2020, each day of the pandemic reveals more uncertainty than before. Businesses are closed at the historical levelcommunities are suffering severe levels of unmet need (from food insecurity arrive interruption in education), and people have lost hope.

I’ve spent my entire career trying to enrich the community, celebrate small businesses, and give back. However, I am watching as our own communities and institutions become destabilized, and more vulnerable to the dispersion of unprecedented chaos.

One day, I realized that instead of sitting around, talking to the hardest hit people and communities would be crucial to restoring and revitalizing communities in America. Step one: Hit the road.

Put your ear on the ground

I traveled the country with my cousin (and now co-founder) Warren Reed to really assess the state of small businesses and communities in America amid the upheaval.

In just a few short weeks, it became increasingly clear that, without intervention, the outlook for small and medium-sized businesses in the US would remain bleak. And it is the lack of opportunity to succeed that is the culprit.

As we went from town to town, business to business, the anguish on the faces of those we spoke to was a common thread. The stories of people who lost their jobs, families stuck, and business owners who lost the company they worked their whole lives to build all begin to tell a bigger story.

For each report that appears on permanently closing more than 100,000 businesses or how Americans have struggled to pay their rent, we have a face, a name, a voice to give it. We see pain and confusion etched on their faces. We hear frustration and despair in their voices.

These feelings resonated everywhere we went. As Warren and I debated what kind of solutions could best improve performance for business owners, transform communities, and create widespread opportunity, we couldn’t ignore what we’ve heard from a leader in Cumberland: “We are a town of multigenerational families. We educate our children, but what good is education without work? Businesses come for a tax break, but no personal investment in our employees. How are these families expected to survive, how do our communities thrive, without a sustainable local economy? It seems no one can be persuaded to help us create one.”

We know that if we use what we learned from the trip as basic truths to guide our solution-building, we can replace these feelings of frustration with affirmation. and support, and most importantly, opportunity.

Breaking down barriers will enrich our communities and grow our economy

Based on our conversations with small business owners, community members, and local leaders around the country, we identified three key issues that we must collectively address to Revitalize America’s Communities:

Poor circulation of capital is the root cause of stagnation

After eight months, eight cities and 6,000 miles, it is clear that capital mobility is poor in our communities and disparities between communities’ access to capital that are problems across the country. By 2020, more than half of all small businesses have unmet funding need. Without capital, businesses cannot establish, grow or create jobs.

The longer the Fed keeps interest rates high, the worse the damage to American business will be. While it is important to use every investment and policy tool to fight inflation and get capital back into the market, we must balance the overall economic impact and the community. Otherwise, both will continue on a difficult path.

Improving economic conditions in distressed communities is not an “urban” problem, it is an American problem

Poor capital mobility affects communities – creating the potential for progress and sustainable development. Meanwhile, the prevailing assumption is that access to capital is an urban problem only.

In fact, more than 52 million people live in distressed communities or areas of opportunity across the country. Have a look at HUD’s Opportunity Zone Map found that access to capital is just as important for the heart of the United States, as it is for urban or coastal cities.

The way forward? Distributing capital to these communities through public and private sector programs and ensuring it remains viable through innovation, economic and workforce development, and small business promotion .

Innovation accelerates progress

American businesses and communities face growing challenges such as economic disparities, inflation, and growing unmet sectors. Every day without access to capital is a day of job loss, financial instability and community being cut off from development opportunities.

If we want to not only bring capital to the community but also help them thrive for the foreseeable future (with interest rate hikes or not), we must invest in technology-enabled, scalable solutions. can drive immediate economic and community impact when needed, when needed. Honestly, there is no other option.

Randy Garrett is the co-founder and president of OppZo.

Opinions expressed in commentary are those of their authors only and do not reflect the views and beliefs of Luck.

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