1 big thing: SVB’s shadow over retail and consumer

This article was originally published in Axios by Richard Collings, Kimberly Chen
March 16, 2023 | LINK

1 big thing: SVB’s shadow over retail and consumer

The Silicon Valley Bank fallout may not hurt consumer-facing companies immediately, but is likely to have longer-term consequences, industry sources tell Richard.

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While the U.S. government has assured SVB depositors of access to their funds, the accessibility of credit lines is less clear — and consumer-facing companies rely more on revolving credit facilities to finance operations than other industries.

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Approximately one year ago, the Fed began its interest rate hike campaign to combat record-high inflation, but could we have predicted that it would result in the second- and third-largest bank failure in US history?

In a new interview with Axios, our CEO and Chairman James Gellert emphasized that the failure of SVB illustrates the challenges posed by increasing interest rates, and explained how the resulting fallout could negatively affect small- to mid-sized companies, potentially leading to distressed situations.

“What SVB did was focus people’s attention on the fact there is dislocation in the credit and capital markets that come from interest rates and inflation,” he says.

The collapse of SVB has sparked a wave of uncertainty in the current climate, leaving companies questioning the viability of their crucial partners or regional banks to weather the impending economic storm. In these challenging times, RapidRatings can instill confidence and certainty by offering a comprehensive view of the financial well-being of third-party entities. By leveraging our services, companies can navigate these challenges with a clear understanding of their business relationships and make informed decisions accordingly.

Interested in learning more? Talk to us today.

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