Tightening Capital Rules: Understanding the Impact of the Final Basel III Framework on Banks and Businesses

The banking landscape in the United States is on the cusp of a significant transformation. With the Federal Reserve aligning with the final Basel III framework, set to be effective from July 2025, banks are gearing up for stricter capital rules. This shift, as highlighted by Michael S Barr, the Fed’s vice chair for supervision, is a crucial inflection point in regulatory reform. At Crawford Business Consulting, we’re dissecting what this means for banks of different sizes and, crucially, for businesses seeking capital.

The Final Basel III Framework Explained:

Basel III, a global regulatory standard on bank capital adequacy, stress testing, and market liquidity risk, is getting its final makeover. The updated framework aims to refine the measurement of credit, market, and operational risks while allowing internal models for market risk. It mandates a 2% increase in capital requirements for every $100 of risk-weighted assets, with variations depending on the banks’ trading and fee-based activities. All banks with assets over $100 billion are brought under this regulatory umbrella, marking a departure from the previous focus on internationally active or substantially larger banks.

Impact on Different Bank Sizes:

  1. Large Banks:

    • These institutions will face the most significant impact due to their extensive trading and fee-based activities.
    • The increased capital requirements could lead to a more cautious lending approach, potentially affecting large projects and capital market activities.
  2. Medium-Sized Banks:

    • Banks in this category might experience a narrowing of the regulatory arbitrage they enjoyed compared to larger banks.
    • This change could prompt a shift in their lending strategies and possibly spur consolidations in the sector.
  3. Small Banks:

    • While not as heavily impacted as their larger counterparts, small banks will still face challenges.
    • The tightened regulations could lead to a more competitive environment, influencing their role in community lending.

Effects on Access to Capital for Businesses:

  • Large Corporations: May find capital acquisition more costly and stringent, impacting their expansion and operational strategies.
  • Small and Medium Enterprises (SMEs): Likely to experience a tighter credit market, making it more challenging to secure loans for growth and operational needs.
  • Startups: Could face hurdles in acquiring initial capital due to the banks’ increased risk aversion.

Community Impact:

The community will feel the ripples of these regulatory changes. The potential constriction in lending by banks could lead to reduced support for local projects and initiatives, impacting economic growth at the community level.

Preparing for the Change:

A phase-in period is proposed, starting from July 1, 2025, to July 1, 2028, allowing banks to adjust gradually to these requirements. However, businesses and consumers should be prepared for a shift in the banking landscape.

Businesses, regardless of size, need to be prepared for this shift. Alternative financing options, like venture capital or crowdfunding, might become more attractive. Building robust financial health and diversifying funding sources will be key strategies for businesses in this changing landscape.

Action Steps for Business Owners

The final Basel III framework marks a new era in banking regulation, with implications that stretch far beyond the banking halls. As businesses navigate this new terrain, staying informed and adaptable will be crucial. 

Expert Support

As we navigate these imminent changes in the financial landscape, it’s more important than ever for business owners to be proactive and strategic in their financial planning. That’s where our Consulting Partner, Hayden Kanikkeberg, comes into the picture. Hayden is not just a consultant; he’s a champion for small to mid-size businesses, fervently committed to helping them flourish in today’s challenging environment.

Hayden’s expertise lies in his unique business credit program, designed specifically to facilitate access to essential capital for businesses without the constraints of personal guarantees. This approach is revolutionary—it empowers you as an entrepreneur to secure the financial backing your business needs while safeguarding your personal assets. In a world where financial security is paramount, Hayden’s guidance offers not just capital but also the confidence and peace of mind that come with knowing your personal assets remain untouched.


Hayden Kanikkeberg of JGalt.io

As a passionate advocate for business owners, Hayden understands the soul and effort you pour into your venture. His method ensures that you can concentrate on what you do best—growing and nurturing your business—free from the anxiety of personal financial risk.

In preparation for the shifting financial markets, I strongly encourage you to connect with Hayden Kanikkeberg. Leverage his expertise as a regional managing partner of J.Galt.io and the unique opportunities of his business credit program. Let’s work together to ensure your business is not only prepared for the upcoming changes but positioned to thrive amidst them.

Reach out to Hayden Kanikkeberg and take the first step towards securing your business’s future in these changing times. REFERENCE THIS ARTICLE FOR EXCLUSIVE AN OFFERING!

At Crawford Business Consulting, we’re equipped to help you navigate these complexities and ensure your business structure and reporting align with legal requirements. Contact us today to ensure your business documents and intellectual property are in order and stay ahead of regulatory changes impacting your business.



This blog aims to provide a comprehensive yet easy-to-understand summary of the Final Basel III Framework, encouraging readers to seek further guidance from Crawford Business Consulting Partner professionals. To review greater detail, you can visit FDIC.gov
The information provided in this communication is intended for general informational purposes and should not be construed as legal or financial advice. The information and viewpoints presented here are based on current law and IRS regulations as Crawford Business Consulting currently understands them, and they are subject to change.