Small Business

Janet who? Main Street not holding breath on rate hike

Bill Curtis and Ed Menapace, owners of The Farmhouse Store.
Kate Rogers | CNBC

While the market is anxiously awaiting Thursday's comments from Fed Chair Janet Yellen and a decision on a potential hike in interest rates, Main Street is quietly going about its business.

The Fed hasn't raised rates from their historically low, near-zero level for nine years, and in that time American small businesses have gone through their ups and downs, chiefly the Great Recession. But what impacts their decisions to borrow, spend and expand much more than rates alone are levels of optimism, available capital and sales outlook, among other factors.

Right now, Ed Menapace and Bill Curtis, owners of The Farmhouse Store in Westfield, New Jersey, say they're paying more attention to what they can control—their inventories and adapting to changes in consumer spending.

"We can shift very quickly and change our product lines, if for example we find customers spending 5 percent less," Menapace said. "We don't worry about things we can't control."

Data compiled for CNBC in May by Manta, a small-business industry researcher, found a similar reaction with 39 percent of 1,000 small-business owners, saying a rate hike wouldn't impact their business at all. In addition, about 64 percent of small-business owners said a rate hike wouldn't pressure them to secure loans for their business quickly.

A potential rate hike comes at a time when smaller companies are feeling decidedly optimistic, by a variety of indicators. The National Federation of Independent Business' optimism index has been holding steady, reading 95.9 in its September report, but still below the average of 98. The report showed a 0.5 percent gain, despite the ups and downs of the stock market in recent weeks, although it may have been too late to register on the index. But the conservative lobbying group does note that uncertainty regarding government policy is always a top concern, and to its membership the Fed's will-they-or-won't-they dance only elevates that issue.

But perhaps another reason smaller companies aren't torn up over a potential increase—capital is readily available for those who need it, says Gene Marks, who runs The Marks Group in Philadelphia, providing tech and financial services to some 600 small-and medium-sized businesses in the Mid-Atlantic region.

"Interest rates are still at historical lows—even if you're borrowing at a point or two higher of a rate," Marks said. "There are plenty of business owners that are borrowing at competitive rates from their banks… but there are a significant number that go to online providers at higher rates because that's their only option," he said, adding a small increase won't have a huge impact.

Christina Leja, Teddy Scott and Norah Scott of Pharmacannis.
Manhattan medical pot dispensary to open on 14th St.

This is demonstrated in recent data from theThomson Reuters/PayNet Small Business Lending Index, which finds businesses borrowing at record rates in June and July 2015, with readings of 146.4 and 145.2, the index's two highest readings since it launched a decade ago.

What's more, according to the NFIB, many say their credit needs are met. The latest optimism index finds only 3 percent of owners reporting that all of their borrowing needs were not satisfied—a historically low number.

In Dun & Bradstreet Credibility's Q2 2015 Pepperdine Private Capital Index, only 14 percent cited a lack of credit availability as their most "difficult challenge" in the previous quarter.

How will small biz take a hike?
VIDEO1:0001:00
How will small biz take a hike?

And if rates did rise, Jeff Sumner, president of TechGuides Inc. in Swarthmore, Pennsylvania, said it wouldn't impact his decision to borrow, although he is not planning to take on new debt at this time. His primary business is technology consulting, which stayed strong even during the recession, although the company also sells equipment, which could potentially slow down if the economy took a hit.

"It has never been an indicator that seems to impact flow of business into my company," Sumner said.