Editor’s Note: Small business owners are used to hearing about the economy in headlines—growth, recession risks, interest rates. But what often gets lost is how those forces actually play out on the ground, where decisions about hiring, borrowing, and investing get made every day.
That’s why I’m introducing a new monthly column, Credit & Consequence, featuring insights from Dean Lyulkin and William Stern. They spend their time in the capital markets and working directly with businesses, which gives them a different vantage point—one that’s more immediate, and often more candid, than traditional economic commentary.
You may not agree with everything you read here. In fact, you probably won’t. But the goal isn’t agreement—it’s perspective. Because in uncertain times like these, understanding how money is moving—and where it’s tightening—can make all the difference. —Rieva
What’s happening in small business lending right now is a perfect example of how quickly conditions can shift—and how those shifts ripple through the market.
Demand for Capital and the SBA
The recent SBA changes reported by Forbes are being framed as a risk story for investors, but we’re seeing a more immediate impact on borrower behavior.
The government is quietly pulling the safety net, shifting risk back onto lenders. When the SBA stops backing borderline deals, banks don’t adapt; they retreat. Community banks move to their safest clients, shutting out strong middle-market operators almost overnight. But demand doesn’t disappear.
The aggressively competent [businesses] aren’t sitting around waiting for a bank committee to deny them. They bypass the banking system entirely and come straight to private direct lenders
We’re seeing it in real time. Demand for non-SBA capital across our portfolio is up 38%. When regulation tightens, serious operators don’t slow down. They just move faster, toward more decisive capital. —William Stern
What’s happening in small business lending right now is a perfect example of how quickly conditions can shift—and how those shifts ripple through the market.
Recession
Are We in a Recession?
A recession isn’t just two negative GDP quarters. This shortcut misses the point. A real recession is a broad slowdown where employment, income, spending, and production are all weakening at the same time. If the labor market is still healthy, you’re usually dealing with a slowdown that feels worse than it actually is.
Right now, recession odds are elevated. Most large forecasters are circling the 30 to 50 percent range. I’d put it closer 25%, given the uncertainty of economic contagion and duration from Iran. The economy still has real support from consumer balance sheets, especially from the top quartile [of consumers] by net worth and income, and a job market that isn’t broken.
In 2024, the concern was rate hikes and the yield curve. In 2026, the risks are more external and harder to model, things like energy shocks, geopolitics, and pockets of stress in private credit. Rate-hike risk is also an emerging factor once again, but still minimal. That makes the expansion feel more fragile, but not necessarily on the brink of collapse.
Most people won’t know they’re in a recession while it’s happening. It doesn’t feel like a switch flips. It shows up unevenly through layoffs in certain industries, tighter credit, and slower activity. By the time it’s officially called, it’s usually already obvious in hindsight.
The stock market usually gives you the cleanest signals. It tends to price in recession risk early and often overprices it. Right now, the message is mixed. Markets are still holding up because earnings expectations haven’t broken, but you’re starting to see more divergence and volatility under the surface. That’s consistent with rising risk, not confirmation of a downturn.
We’re not in a recession today. We’re in a period where recession risk is back on the table. That’s a different environment, but it’s not the same thing as an economy already rolling over. —Dean Lyulkin
Layer on rising energy costs, and the picture becomes even more complicated—especially for businesses already operating on tight margins.
Cost Pressures
Risk of Recession
$90-100 oil is not going to drag the U.S. services-based economy into recession, with a quarter- or even half-point hit to annualized GDP. But it does create some unwanted headwinds for the incoming Fed chairman. The risk of handcuffing the Fed with oil-induced inflationary pressures is much greater than any drag on the economy from higher prices. The rational thought is that politicians understand that very well and wake up in a cold sweat each night thinking about the fragile middle-income consumer.
With midterms coming up, we have to believe the conflict conflagrating oil markets has a finite shelf life. And for now, investors are mostly behaving that way.
Plus, on Good Friday, the economy reported 178,000 new jobs. Three times the 57,000 expected. Unemployment fell to 4.3%. And here’s the detail that matters for inflation: wage growth slowed to 3.8% year-over-year. That’s the sweet spot: strong hiring without accelerating wages. The Fed can be patient. The February report showing 92,000 jobs lost now looks like a blip, not a trend.
Recessions don’t start with 178,000 jobs being added and unemployment falling. They just don’t. Do you think something shifted in March to derail this data? I don’t. The slowing wage growth is a bonus. It gives the Fed cover to hold rates rather than hike them. —Dean Lyulkin
Will Price of Diesel Trigger a Recession?
Wall Street looks at $5 diesel and sees an inflation metric. Anyone actually funding the middle market sees a direct tax on operating cash.
The Fortune 500 can hedge fuel costs out to next year. Independent operators have to eat that margin compression today. They have to make brutal choices. Pass the freight hike to the consumer and kill demand, or absorb it and burn through their cash reserves.
That is the actual recession trigger.
A geopolitical shock in the Middle East doesn’t just make shipping more expensive. It actively starves the domestic supply chain of working capital. —William Stern
Of course, global events don’t stay abstract for long. They show up quickly in day-to-day operations—often in ways that are hard to predict.
How Has the Uncertainty Over The War Affected U.S. Small Businesses?
I don’t expect a fast move back to pre-war levels. A ceasefire is one important chess move in a very complex, multi-party negotiation. I think it helps put a ceiling on the upside in oil more than it guarantees a big drop at the pump in the next 30 days.
We understand incentives. Iran wants this conflict to end more than anyone else, but so much harm has been done to military assets and government institutions that they have more sunk costs than the international community. This makes their position stronger in some ways.
But ultimately, they can’t operate in a vacuum and must rely on their patrons in Russia and China to dictate the next move. It is still unclear who the U.S. is negotiating with, and that is likely part of the problem. When the chain of command in Iran becomes clearer, the ceasefire will carry more meaning.
If shipping starts to normalize this month, you could start seeing modest relief at the pump within a matter of weeks, not days. For groceries and other staples, the effect is slower and smaller than what consumers see at the gas station, but it is real. Higher diesel and freight costs work their way into food distribution, parcel delivery, packaging, and wholesale logistics. So even if fuel starts coming down, there is usually a lag before that shows up in prices. But markets look far ahead, so watch commodities, bond yields, and stock indexes for changing expectations about the conflict’s outcome. Headline data is an even more dangerous lagging indicator than usual today.
The war has not yet dramatically affected U.S. small businesses. They’ve enjoyed three pretty strong years after 2022’s inflation and interest rate shocks. But if this conflict drags on, freight surcharges, fuel volatility, and supplier pass-throughs will start to bite, simply because the little guys don’t have the scale advantages that larger companies do. The biggest pressure points are businesses with local fleets, delivery exposure, field service operations, food distribution, construction, and businesses that depend on regular parcel shipping. —Dean Lyulkin
Energy, in particular, has a way of moving faster than most businesses can react.
Oil
Surge in Diesel Prices
The surge in diesel is one of the most economically sensitive parts of the current energy shock. Gasoline hits consumer pocketbooks, but diesel literally moves the global economy. Transport costs for almost everything are up, which will inevitably show up in food and consumer prices soon enough.
If diesel prices stay elevated, the biggest risk is a second wave of cost-push inflation. Central banks fear just such a stagflationary feedback loop. High energy prices keep inflation elevated, which prevents central banks from cutting rates even as the labor market weakens. That combination can trap economies between persistent inflation and slowing growth. —Dean Lyulkin
From an investment standpoint, the implications are just as significant—but often interpreted very differently depending on where you sit.
Investors
Look at the actual math. We’ve got crude blasting past $100 a barrel because 20% of the global supply is choked off in the Strait of Hormuz. The financial media wants to call this a temporary geopolitical premium. It’s not temporary. It’s a massive inflation bomb.
Advisors need to stop putting their clients into passive portfolios and start looking at street-level cash flow. If your clients aren’t rotating into hard assets or operating businesses with absolute pricing power, they’re going to get completely wiped out by energy costs. You can’t out-yield a $110 barrel of oil with a standard Treasury bond. —William Stern
For small business owners, though, the impact isn’t theoretical—it’s immediate.
Small Businesses
The financial media looks at rising oil prices and screams about consumer sentiment. Sentiment doesn’t matter. What matters is cash flow. When diesel spikes, the operating cost for a fleet of trucks absolutely explodes overnight. You can’t run a fleet of service trucks on political promises. When fuel prices spike, the margins for real operators just evaporate overnight.
The big banks get nervous and immediately pull back credit right when Main Street needs the liquidity. At Cardiff, we actually look at the cash flow, and the math out there is completely brutal right now. —William Stern
And these pressures don’t stop at the business level—they’re showing up in personal financial decisions as well.
Personal Finances
Savings and Emergency Funds
Standard advice says keep three months of expenses tucked away, but that’s just not enough runway right now. If a major shock hits your income, three months of savings vanish instantly. You really want six to 12 months of pure liquid cash sitting there as a buffer so you can actually sleep at night.
But here’s the catch. Anything beyond that defensive wall needs to be put to work. If you just leave all your excess cash sitting in a standard savings account, you’re quietly losing purchasing power to inflation every single day. —William Stern
Dean Lyulkin is the founder of The Dean’s List, a San Diego–based registered investment advisory firm focused on capital markets research, portfolio strategy, and long-term wealth building. He works with investors and entrepreneurs to help them better understand how economic cycles, credit markets, and policy decisions shape real investment outcomes.
Dean frequently writes and speaks about financial markets, private credit, interest rates, and the intersection between investing and business growth.
William Stern is the founder of Cardiff, a San Diego–based small business lender focused on speed-first capital and technology-driven underwriting. Since 2004, he has helped businesses access funding more quickly through AI-powered credit models and modern lending infrastructure.
Cardiff was named America’s Favorite Small Business Lender (2024–2025) and won the Digital Bankers Global SME Banking Innovation Award (2026).
William often shares insights on small business finance, credit markets, entrepreneurship, and economic trends affecting founders and operators. He also hosts the A Stern Talk podcast, where he speaks with entrepreneurs and investors about business growth, leadership, and navigating changing market cycles.
Photo courtesy Getty Images for Unsplash+
