It should be a simple question, right? How bad is the credit crunch for small business? Here we are, having just passed a huge national stimulus bill and heard Treasury Secretary Tim Geithner's outlines for his economic strategy.
Will the stimulus work? For whom? And what about the new treasury bank plan?
With these questions in mind, please join me in collecting some real information on how small businesses are fairing when they apply for a loan. If you own a small business, take a couple minutes to answer a few short questions here. To understand how this will shed light on the current credit crunch, take a look at these results from my prior survey.
With due respect to some prominent groups and business reporting (which you can get here, for example, from the Wall Street Journal, or here and here from this blog), most of the public voice of small business seems to be either "we want our bailout," "what's in it for us?" or predictable rehash of last Fall's election campaign; taxes, tax breaks, health care rules, and so on. You do see the stimulus debate bogging down into partisan politics, already, right?
As a business owner, with 40 employees and 25 years in business, I don't see a credit crunch as a political football. It's businesses not started, businesses not growing, and businesses failing.
- Take the businesses not starting: in a good year this economy generates somewhere between half a million and a million new businesses, and if we don't have that flow going -- and for the last few months, we don't -- then a lot of people who would have jobs don't; and a lot of people who would have been self employed aren't.
- Many businesses need financing to survive. Just to put numbers to it, a business that sells $5 million a year through retail channels probably needs about $2 million in borrowed money just to support waiting for channels to pay up. That's just one example, but a real one, one that I've lived through out in the real world.
- Some businesses need financing to grow. Investment is notoriously scarce these days as angel investment and venture capital are both cutting back, but there are still new ideas and new opportunities.
With it all, though, the SBA cut back drastically last year, and the general feeling is that banks, despite the recent bailout, are generally making things harder for business borrowers, not easier. And if that's true, it's not politics, but business; and it's bad news. And yet, I hear from one banker friend that there's a small boom going on (apparently in mortgage refinancing, though, not business loans); and, in the interest of full disclosure, my own business had no trouble signing a new credit line earlier this month. And earlier today I talked to Joel Prakken of Macroeconomic Advisors, who had just released the latest ADP job figures (which are bad, again). Joel says he hears a lot of worry about credit crunch as he talks to businesses around the country, but more worry about rates than worry about not actually having loans approved.
Which serves to highlight the real question: how is small business doing with the banks after the meltdown? Or, if you prefer, after the bailout?
Help answer these questions by taking this survey or sending it to friends who own a small business.
So I'm asking small business owners to join me in this poll about the credit crunch. It's following up on what we started a few weeks ago we asked small business owners to share their experiences here with a simple poll on what they're seeing after the meltdown. That was a pretty bleak picture; more so when you combine it with the blog the meltdown feature that preceded it.
In this case the idea is to get specific about the credit crunch. Small business owners: have you applied for business credit? Was it approved, or turned down? Have you not applied because you didn't think you'd have a chance? Let's see if we can get a better picture of what's really going on out there.
Please click here to take this poll.