How the High Cost of Borrowing May Skew the Presidential Race

Kimberly Jolasun, a 32-year-old entrepreneur in Atlanta, has never voted for the Republican candidate for the presidency. That may be about to change.

Her company, Villie, is an online platform that lets new parents share photos and updates about their babies with friends and relatives and register for gifts like strollers and playpens. Not yet profitable, her company needs financing to grow. But venture capitalists struggle with her untraditional profile, she said. Technology is dominated by white men in places like Silicon Valley and Austin, Texas. She is a Black woman in Georgia.

Banks want to charge her interest as high as 14 percent for business loans. The interest rate on the credit card debt she used to start the company has spiked to 25 percent, tripling her monthly payments.

Ms. Jolasun knows that borrowing costs are driven by the Federal Reserve. She does not blame President Biden. But she assumes that his Republican opponent, former President Donald J. Trump, is more in tune with the needs of business owners. So she is seriously contemplating giving him her vote.

“For the first time in my life, the ball’s in the air,” she said. “I haven’t made my decision.”

Despite indications of vigor in the economy, higher borrowing costs are a source of financial anxiety that could prove pivotal in the 2024 presidential election — especially in Georgia, one of six battleground states expected to determine the outcome.

Black voters are a crucial bloc in Georgia; four years ago, they made up 27 percent of the electorate. By many indications, Black Americans are disproportionately affected by higher interest rates on mortgages, credit cards, student loans and business debts. Start-up companies owned by people of color — especially Black Americans — confront substantial barriers in raising funds, making them more vulnerable to increased borrowing costs, according to a survey of minority-owned small businesses by the Federal Reserve. Though their companies are typically smaller and less profitable, Black and Hispanic entrepreneurs tend to be rejected on applications for financing even after accounting for differences in credit ratings, suggesting that racial profiling is an issue.