Business lenders face more stormy headwinds in 2023

The arrival of a new year often brings hope for a fresh beginning. But credit union business lenders who have dealt with the impact of a turbulent economy for many months should, unfortunately, be ready for more of the same in 2023.

Mortgage financer Fannie Mae cut right to the chase in a Nov. 21 article outlining its economic and housing outlook.

“With the effects of rising interest rates yet to be fully felt in the broader economy and many forward-looking indicators weakening, we continue to expect that an economic contraction will occur in 2023.”

CUNA forecasts a “relatively mild” recession in the first half of 2023. As described in CUNA’s November Economic Update, the Federal Reserve continues to raise interest rates to rein in inflation, with the impact being felt both by consumers and businesses.

Interest rates and inflation continue to weigh on business and economic activity, reported in a Nov. 30 post. They also said the sentiment concerning the economic outlook currently focuses on greater uncertainty or increased pessimism.

‘Business loans more expensive’ reported that the Federal Open Market Committee (FOMC) released a projection during its September meeting that showed the federal funds rate – the rate at which commercial banks borrow and lend their excess reserves to each other overnight – topping out around 4.6% next year.

However, other market observers have different opinions. The CME Group FedWatch tool shows an almost 50% chance of rates sitting between 4.75% and 5% by February 2023.

“The goal of these rate hikes is to curb inflation; however, that comes with a cost. When the Fed increases rates, so do lenders. This means you can expect to see business loan rates move in tandem with the Fed rate increases, making business loans more expensive in 2023,” according to

“The flows of lending opportunities are limited,” Warren de Haan, managing partner and co-CEO of Acore Capital, said during a Fall Financing CRE Forum in New York Nov. 10. “Borrowers don’t want to borrow money at 8 to 9 percent when they were borrowing at 4 percent.”

‘Wonderful things can be achieved’

At times like these, in which credit union business lenders are looking for answers, a professional meeting like CUNA Business Lending Roundtable is a way to discuss situations and brainstorm possible solutions with people who are dealing with the same economic challenges.

Getting together with peers is a unique opportunity to learn from each other through dynamic discussions on the latest challenges, opportunities and trends in commercial lending products and services. The pandemic and its economic impact continue to change the way business is done. Congregating is a great way to discover how industry practitioners are dealing with this new business landscape.

“Unity is strength … when there is teamwork and collaboration, wonderful things can be achieved.” – Mattie Stepanek, American poet

Ligia Vado

Ligia Vado

Ligia Vado, PhD is Senior Economist at CUNA. Web: Details