I was interviewed recently for a Hartford Business Journal article about small businesses grappling with the difficulties of inflation, supply chain disruptions, employee shortages and more.
As a founding partner of FML, I’ve kept my finger on the pulse of the perpetually changing financial landscape for two decades. The times we’re in now have brought about a new set of challenges that face small business owners.
Here is the full section of the article where I am quoted and cited as a source:
Rising interest rates and fears of a possible recession have made small businesses less bullish about capital investments, said Frank Milone, a partner at Glastonbury-based Fiondella, Milone and LaSaracina (FML).
“In the past, [businesses] were making a lot of capital improvements because money was fairly cheap,” Milone said. “But [some business owners] are thinking twice about whether they need to do that now because money [will cost more] to borrow.”
Even for businesses that decide to lease versus purchase equipment, there are new lease accounting standards mandated by the Financial Accounting Standards Board (FASB), which go into effect in 2022.
The rule change applies to all private companies as of this year, and is designed to create greater transparency around company financials.
Under the previous standard, only capital leases — which act as a debt to own the underlying asset — were required to be listed on a company’s balance sheet. Operating leases, or payments for the right to use an asset, were considered “off-balance sheet” and accounted for in footnotes. Milone said his firm has been having proactive conversations about the changes.
“These operating leases now have to get recorded on the [business’s] balance sheet and that could impact [loan agreement terms] with their bank,” Milone said.