Shark Tank star Kevin O'Leary said on Tuesday that many businesses in the United States, especially smaller ones, can expect a "crisis emerging" soon.
O'Leary, who is also the chairman of O'Leary Ventures, made his statement in response to a survey from the National Federation of Independent Business, which claimed that its Small Business Optimism Index had reached a seven-month high. When asked if this survey reflected what he has discussed with small business owners and entrepreneurs, O'Leary said it is "not what I hear," during an appearance on Fox Business.
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"I live in the real world," O'Leary said. "I'm here on the Hill today in Washington talking to everybody I can about the problems I've got in just getting working capital for small businesses. We have a crisis emerging. These rapid rate hikes that have occurred, unprecedented speed of these hikes, have put my small businesses, and I'm talking about companies with 5 to 500 employees, which represent over 60% of our economy."
The Shark Tank star noted that businesses in the S&P 500, which represents 500 of the largest companies listed on stock exchanges in the U.S., will have "no trouble" financing their business. However, the same cannot be said about small businesses anymore due to the cost of capital going "through the roof.
"Let's tell small business how to survive this pending crisis," O'Learry said. "And the program that I'm really talking up is the employee retention credit, which none of these small businesses have applied for yet. And I want everybody on the Hill to let their constituents know they should apply for it, because we've got a real crisis coming here."
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O'Leary's comments come as annual inflation slowed to 3% in June this year, a positive development in light of the Federal Reserve's efforts to lower price pressures by raising interest rates. Wednesday’s report marks 12 straight months of declines in the annual inflation rate after it peaked at a whopping 9.1% last June.
The much-anticipated update to the consumer price index showed that, while inflation is still too high, it is cooling in response to the Fed’s aggressive interest rate hikes. The Fed has raised rates by a large degree since last March, with the target rate now 5% to 5.25%.