23 OCT 2023

Small Business Owners Tell the Fed to “Stop the Squeeze on Small Business” with Launch of National Campaign Against Basel III Endgame

  • Small business campaign to highlight negative impact of the Federal Reserve’s proposed Basel III Endgame as new survey data shows 78% of small business owners are concerned about their ability to access capital

WASHINGTON, D.C., OCTOBER 23, 2023  – As new survey data shows that 78% of small business owners are concerned about their ability to access capital, Goldman Sachs 10,000 Small Businesses Voices today announced the launch of a multifaceted national media and advocacy campaign to tell the Federal Reserve to Stop the Squeeze on Small Business and abandon the proposed Basel III Endgame regulation. The Stop the Squeeze on Small Business campaign launches with two new digital advertisements and will continue in the coming weeks with additional paid media, as well as other activations of small business owners to ensure policymakers understand the harmful impact of the proposed regulation.

Since Goldman Sachs 10,000 Small Businesses Voices launched in 2020, small business owners have consistently stated that accessing capital is one of the biggest challenges they face, which led 10,000 Small Businesses Voices to partner with the Bipartisan Policy Center to produce three policy reports to address small business financing gaps and modernize the Small Business Administration (SBA). The new survey data shows that small business owners are still deeply concerned about their ability to access capital, and how Basel III Endgame could impact their business:

  • Only 29% of small business owners say their business can currently afford to take out a loan given current interest rates, and 85% say if access to capital continues to tighten it will impact their growth forecast.
  • If access to capital continues to tighten:
    • 67% of respondents say they will have to halt expansion plans,
    • 42% say they will need to layoff workers or stop hiring, and
    • 21% would close their business.
  • Nearly one-in-three (31%) cite 2023 as being their most difficult year over the past four years.
  • 87% of small business owners say it is important for their elected officials in Washington to weigh in with the Federal Reserve regarding the impact of new bank capital requirements.

“In the past year and a half, lending has tightened as the Federal Reserve raised interest rates 11 times since March 2022. Interest rates are higher now than any time over the last 22 years. The result is evident in survey findings showing small business owners are alarmed by the difficulty in accessing capital,” said Gwen Jimmere, CEO & Founder of Naturalicious in Livonia, Michigan and an alumna of the 10,000 Small Businesses program who is featured in an ad. “The proposed Basel III Endgame regulation, which the Federal Reserve acknowledges would further increase the cost of capital, would be a devastating addition to an already difficult capital environment. Small business owners are mobilizing to tell the Federal Reserve to Stop the Squeeze on Small Business and abandon the proposed Basel III Endgame rule.”

In July 2023, US regulators proposed the Basel III Endgame rule, which will require large banks and most regional banks to further increase the amount of capital they hold by an estimated 20% on average. The negative impact to US small businesses includes:

  • Reduced access to capital. If capital requirements for banks are significantly increased as proposed, they will be pressured to offer less financing to borrowers or offer it at a higher cost. The smaller borrowers are likely to be squeezed out – including small businesses, households, and consumers.
  • Further disadvantage minority-owned small businesses. Minority-owned businesses already face significant challenges accessing capital. According to the Goldman Sachs 10,000 Small Businesses Voices survey, 81% of Hispanic small business owners and 85% of Black small business owners are concerned about their ability to access capital. This proposal would make it even harder for minority-owned businesses to access loans and credit.  
  • More expensive borrowing. Many banks already consider small businesses to be bigger risks. The capital proposal will further exacerbate the problem, making it more expensive for banks to lend to small businesses.

“If the Basel III Endgame proposal is implemented, banks would be forced to further tighten their lending standards as available capital is more limited. This would make it even harder for small business owners like me to access capital. My fellow small business owners are sharing that continued restrictions to credit could force them to lay off workers, halt expansion plans or close altogether,” said Silvia Lucci, Founder of LUHV Food in Philadelphia, Pennsylvania who is a 10KSB alumna and also featured in an ad. “Between climbing interest rates, continuing inflation, and now Basel III Endgame poised to further tighten capital access, small businesses are being squeezed from every direction.”

Goldman Sachs 10,000 Small Businesses Voices small business owners are the latest in a broad and diverse coalition raising concerns about the proposed regulation. Lawmakers from both sides of the aisle and groups ranging from the U.S. Chamber to the Urban League and NAACP have also expressed deep concerns over the proposed Basel III regulation.

The nationwide survey of 1,240 small business owners was taken October 9-12, 2023. Respondents came from 48 U.S. States, plus Washington, D.C., and Puerto Rico. To read more about the Stop the Squeeze on Small Businesses campaign and learn more about the negative impacts the proposed Basel III rule would have, please visit https://www.goldmansachs.com/citizenship/10000-small-businesses/US/voices/basel-iii-endgame/index.html.

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About 10,000 Small Businesses Voices

Goldman Sachs 10,000 Small Businesses Voices, which in April marked its three-year anniversary, builds on Goldman Sachs 10,000 Small Businesses and organizes program participants to advocate for policies that matter to them. Learn more at www.gs.com/10ksb-voices

About Goldman Sachs 10,000 Small Businesses
Goldman Sachs 10,000 Small Businesses is an investment to help entrepreneurs create jobs and economic opportunity by providing a comprehensive business education program and access to capital and business support services. To date, 10,000 Small Businesses has served over 14,000 small businesses across the United States. The program has reached businesses from all 50 states, Puerto Rico, and Washington, D.C. Learn more at www.gs.com/10ksb.

About Goldman Sachs
The Goldman Sachs Group, Inc. is a leading global financial institution that delivers a broad range of financial services to a large and diversified client base that includes corporations, financial institutions, governments and individuals. Founded in 1869, the firm is headquartered in New York and maintains offices in all major financial centers around the world.