Banks. Maybe we should have let them figure it out themselves.

I spent the last 1 1/2 hours of the business day in my accountants office. We were not at a deadline but the work we reviewed today I expected more than a few days ago. It seems that a great deal of his time has been spent lately dealing with banks and related problems. What is his blunt assessment? They are NOT lending money. They are renewing most credit lines but aren't opening new ones. I am not talking about mortgages. I am talking about businesses. The funny thing is....he had lunch with a banker today. That has happened quite a bit. They solicit his referrals but....when the opportunities are presented they say...."we don't want that"....or...."we're not doing those". This is a small private firm with about 8-10 on staff. They have handled my business accounts for twenty two years. His comments were along the lines of...."I've never seen anything like this"......"Nobody can get a new loan"...."They (bankers) come and ask for business and then turn down what is offerred". I talked a lot about the secondary markets....about selling the commercial paper and the problems because of the ludicrous bids under it. He told me that the bankers were telling him the same things. I am a business owner and know a lot of other owners. The only time that I have witnessed anything comparable to the last three months is the three week period after September 11, 2001. This though, is fundamental in nature with roots penetrating the surface. If you don't or have never owned a business you cannot possibly understand how capital intensive that can be. And trust me, you didn't learn it in business school either. It is impossible to really explain how frustrating it can be during good times....when you KNOW you are making money.....but you don't have any.....because it is all tied up in stuff.....equipment...buildings....inventory....vehicles....and then every few days you have to do it again.....that is, you have to pay everybody...and then hope there is some left for you. I know there are exceptions....there always are but, right now, credit markets are basically frozen to small business and I can assure you....small business needs capital to expand. I am not posting this as a statement on the direction of the market....heck, you think I want the market to continue plummeting when I am a business owner? But I am saying this. Unless things start to turn in rather dramatic fashion so small business can expand......I do not think that Mr. Market has any idea yet how bad things can get.

i just went to my little discounter who is closing in a week because of no credit. 4 floors and at least 60 people out of a job, and an low priced source for customers is finished. They made money, guess that was the problem - they had always used credit to roll inventory, and got stuck. there will only be monoliths left, and they will not be very consumer friendly, if there are any consumers left alive.

Thanks for the anecdotes.

Yes, this is consistent with our family's experience too. The work around is to use home equity, but that's not a bottomless pit and it's personally a very risky venture. The average joe just thinks business owners sit back and rake in the big bucks and need to be taxed more. Sheeze. Maybe the loss of a few million jobs will wake folks up to the plight. Mark

Small business have more people on the payroll than the auto makers ever thought about. They collectively cannot "donate" millions for votes. "They" will learn someday, but it will be TOO LATE.

It's true. I suspect more than a few of us have thought seriously about New Zealand. More may "shrug" over the next several years. Mark

The work around is to use home equity, but that's not a bottomless pit and it's personally a very risky venture.

The problem there (beyond risking one's home) is the raising of the perceived risk in the current environment. Creditors are pulling away from good people....those whose profiles and records represent what was minimal risk. If you are aware of what is going on....you cannot help but be concerned that anything you do to access credit will make someone look at you and go....."whoa....this guy may be in trouble....he just borrowed some money". Right now the perception is one must be borrowing because of problems looming in the background. Borrowing money to make money isn't allowed in the current environment.

The average joe just thinks business owners sit back and rake in the big bucks and need to be taxed more. Sheeze.

If only they really knew. The media focuses on the big winners. After all, its the American dream. They NEVER tell the public that the average (my guess is about 80%) business owner struggles even when times are good because of CASH FLOW. I've gone two, three months and more many times during my 24 years WITHOUT GETTING PAID.

Edited by Iblayz, 09 January 2009 - 10:28 AM.

If only they really knew. The media focuses on the big winners. After all, its the American dream. They NEVER tell the public that the average (my guess is about 80%) business owner struggles even when times are good because of CASH FLOW. I've gone two, three months and more many times during my 24 years WITHOUT GETTING PAID.

I have been a silent owner in several small companies and this is so TRUE even when well run. Most mangers were next to the last to get paid - IF - there was any cash left. I was the last to get paid and sometimes was short term banker.

I got out around '01, just was not worth it.

Edited by mss, 09 January 2009 - 11:03 AM.

I was the last to get paid and sometimes was short term banker.

Short term? LOL. If only I could be so lucky. My company owes me more than it owes anybody else....and, as usual, they will get paid first.