Illustration by Alexandra Citrin-Safadi/The Wall Street Journal

Fed Rate Increases Hit Small Businesses the Hardest

Companies with smaller payrolls and valuations are facing higher funding costs

Illustration by Alexandra Citrin-Safadi/The Wall Street Journal

For companies that need to borrow money these days, it pays to be big.

The Federal Reserve’s rate-raising campaign has put a notable crimp in financing for companies with smaller payrolls and valuations. The average rate for a loan from the U.S. Small Business Administration, which historically costs less than a bank loan, has reached double-digits, driving many small firms to borrow less. 

Those...