Credit Drought Creates Small Business Desert
by Rond10868, Performer
- Created: March 23, 2010, 10:58 pm
We are in almost constant contact with a variety of small business owners at our website http://www.start-a-business-faq.com. The huge problem continues to be a credit drought that has already killed off the weak, the incompetent and the profligate small business. The small businesses that are left standing are the smart and formerly profitable. There needs to be a new program created specifically for this group, especially if this ugly recession we are in turns into a double-dip scenario.
I attended a small business financial seminar on how to secure credit and loans during this crisis. The tin-eared banker who ran the seminar spoke about submitting three years of financial statements that showed a positive cash flow, etc. and personal financial statements that showed money in the bank. The small business owners left the session as downcast as they had come.If a medical doctor had run a seminar at a hospital telling wheel-chair bound patients that what they needed to do was get up and start running it could not have been any more stupid and a waste of time.
There has to be a way to restore small business lines of credit at reasonable rates. I am sure government officials think of such a program and shudder at its cost. But I believe such a program would cost less than doing nothing. Let's take a business that has had a line of credit of $500,000 cut off that the entrepreneur used to finance inventory. As a result, 12 of his 20 employees have been laid off. What would such a guarantee cost to see the business person over this period? Compare that cost to the 12 employees who have been laid off and are collecting extended unemployment benefits, food stamps, Medicaid and are now getting behind on their mortgages and credit card payments.
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