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Archive for the ‘credit line’ Category

A recent article on Businessweek.com looks at the growing dilemma between banks and small businesses. Banks are reluctant to loan to small businesses and therefore small businesses are unable to find necessary capital to keep their businesses afloat. According to the article, borrowers were tapping sources of funding other than banks because either credit interest rates where too high or banks reduced or stopped lending to small businesses all together. Home equity loans are a popular source of funding for small businesses, but those are becoming scarce. According to the article, some factors small company owners should look into before deciding how much equity and or credit is right for their company is:

• The stage in which your business is in
• Industry norms for assets, inventory, and receivables
• Forms and Financing
• Your goals for your business
• When equity investors offer more than cash
• Size of monthly loan payments

How is your company finding capital? Read the article “Raising Capital: Equity vs. Debt” and let NSSEA know your thoughts!

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Small business owners are facing massive credit restrictions from their banks, according to an article in Reuters.com. Businesses are dealing with banks terminating business credit lines, cutting home equity lines, and putting a stop to credit line leniency. What is a small business to do? Many small business owners feel that banks are still very afraid of taking lending risks with small companies and they feel that banks are pulling back from giving small companies access to much needed credit lines.

The article also mentions that the President of the National Small Business Association (NSBA) warns that if credit does not become available soon, American entrepreneurs will not have the money to expand their businesses and ultimately fall by the wayside. Especially since many small companies use lines of credit to pay employee salaries.

In “Recession Realties,” an article published in the Nov/Dec issue of Essentials, which will hit mailboxes in mid-November, Richard Caudle, president of Rock ’N Learn, admits having to use a line of credit for the first time because of the decline in the economy. Well, how about you? Have you dipped into your line of credit to help absorb costs at your company? Also, has your bank decreased or eliminated your line of credit all together? Let NSSEA know your thoughts.

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