Los créditos disminuyen a medida que los bancos se preparan, una empresa de seguros abandona Florida y los bancos apuestan por Barbie

Hey, everybody, this is Gene Marks and welcome to this week's episode of Paychex THRIVE's Week in Review. This is where we take some interesting news from the past week that impacts your small business and give a little take on some insights into that news. Right? So, we've got three items this week. Let's get into it, shall we?

The first has to do with loans and loan rejections. This piece comes from USA Today, who are reporting a new study from the Federal Reserve that shows that more Americans are rejected for loans just as they may be feeling tapped out. The rejection rate for people, according to the report, for credit jumped to 21.8% in June, up from 17.3% in February, and the highest level in five years.

This survey is released every four months with data collected during February, June, and October. The report underscores the caution financial institutions are taking amid one of the most aggressive Fed rate hiking cycles in history and a potential recession. Major banks like JP Morgan Chase, Citigroup, Wells Fargo, and now Bank of America have reported they were setting aside more money to cover bad consumer loans as credit card balances rise.

Delinquency rates in credit cards and other retail lines are rising and are expected to rise further before leveling off to a normal level, this was according to Citigroup's Chief Financial Officer Mark Mason in a conference call he had with analysts the week before.

So, what does this mean for your business? It means tighter credit. If consumers are having a hard time getting loans right now or a harder time, that's the same thing for a lot of small businesses around the country.

It's not that the credit isn't available to everyone, it's just that it's definitely more expensive. The common prime rate right now, or the average prime rate around the country, is anywhere from 8.25 to 8.5%. Some of my clients are paying anywhere from 9.5 to 11.5% in interest. If you were looking to refinance your debt for working capital or equipment or a property, your bank may have the credit available. They will be more expensive, but they're also going to be looking at your ability to repay that loan, particularly in an environment of these higher interest rates. And that's why banks are cracking down on consumers.

So, banks are cracking down on consumers, and if they're putting away reserves for delinquencies, you know that small businesses can't be too far behind. So, watch it, keep your options open, and prepare to spend more for financing this year, assuming that you're even able to get it.

Well, if you're a homeowner in Florida, getting insurance has just become a lot harder. According to CNN, Farmers Insurance has pulled out of Florida, which is affecting 100,000 insurance policyholders. They will stop offering their policies in Florida, including home auto, and umbrella, and that will force thousands of people to change their insurance provider, most likely at a higher cost.

According to the CNN report, the company said in a statement that its decision to get out of Florida was a business decision necessary to manage its risks, risk exposure in the hurricane-prone states. So, such policies, according to one representative from Farmers Insurance, say that such policies will continue to be available to serve the insurance needs of Floridians, certain policies will, but for the most part, they are pulling out of homeowner's and umbrella and auto, as well.

Now, without panicking, this insurance company has barely a 2% share of the state's insurance market. Florida requires affected policyholders to receive 120-day notice that their policies aren't being renewed. So, yeah, this isn't a political thing. This is weather. The risk of hurricanes is getting harder and harder, and unfortunately, some insurance companies in the state of Florida — and by the way, this recently happened in California — have been subject to some abuse of their policies from certain individuals. There's legislation has been proposed to curb that abuse, but the legislation does not have a significant impact in the short term, which is why some of these insurance companies, like Farmers, are pulling out.

The impact on your small business? Well, if you're in Florida, less people being able to get insurance in that state may have a negative impact on them staying in that state. It's a reason not to move to Florida, move somewhere else. So, if you're running a business and expecting growth in your business because of all the new people moving down there, that growth may be hindered a little bit if insurance policies themselves, if it's tough to get insurance in the state, let alone the fact that it's becoming more and more hurricane prone.

So, a lot of people expect that either blame that on weather patterns or climate change, but the fact is it's getting harder to get insurance in Florida, and that's not a great thing for individuals. That has an indirect effect on the small businesses in that state.

Finally, there's Barbie, Barbie, Barbie. I have not seen the new “Barbie” movie. I have no plans to see the “Barbie” movie. I will never see the “Barbie” movie, but apparently a lot of people have. The new “Barbie” movie has racked up records at the box office over the weekend, and that has created a lot of opportunities for small businesses around the country.

Let me give you a few of them. According to this report in Reuters, an online retailer called Anima Iris — it sells handmade purses — launched a 30% off sale on its pink handbags with Instagram captions including “We’re all about that Barbie life. What are you wearing to the “Barbie” movie premiere?”

Another small business called Stout Ridge is a New York-based vineyard/distillery that has a weekly email newsletter and it blasted out a spur of the moment Barbie inspired hot pink cocktail recipe. Moon Fire, which is an arts boutique based in Dallas, Texas, hosted a Barbie themed collaboration in person with 10 small businesses selling hot pink Barbie-inspired products. And Swag Pop Company, a pet retailer, promoted its Barbie-and-Ken-themed bandanas for dogs on social media. The owner said it's a vintage black and white pop outfit sold out within the first few days, faster than her typical pop apparel.

Barbie's big. I ain't going to see, but a lot of people are seeing it, and a lot of small businesses around the country are taking advantage of the Barbie phenomena.

My name is Gene Marks and you've been listening to another episode this week of the Week in Review. If you have any tips or advice or would like to join us or suggest a guest for our Paychex THRIVE podcast, please visit us at payx.me/thrivetopics.

Thanks for joining me. Hope you enjoyed this. Hope he has some good news to help you run your business. We'll see you again next week. Take care.  

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