Tuesday, February 17, 2009

The Credit Crisis

Have you been affected by the economy? Initially I thought I would not be affected, but boy was I in for a surprise. I've been a small business owner now for about six years and during those six years we received several loans from National City Bank where we have our personal and business accounts. Our biggest loan up to date was about $33,000 for a couple of new machines and we paid that off just last year and it was paid automatically from our business checking account.

We had an opportunity to buy a new piece of equipment at an amazing price so we went ahead and made the purchase from the dealer and told him I would get a loan from my bank. After a couple of days I called the branch manager and told him I needed a loan for a new equipment and he said OK and sent the application right over. I've filled out several of these applications so it was a breeze and faxed it over to the manager the next day.

After a few days he contacted me and said that they can not approve my loan and he really could not give me a reason except for the fact that they've tighten up on their lending. His advice was that I could probably get approved if I applied for a "personal loan" not a "small business loan." So how much was I applying for? A mere $6,000! For some of you that may sound like a lot, but when you're a small business owner that is a relatively small amount.

Although I probably won't need any new equipment anytime soon, I do wonder about the "what if's." What if an older equipment breaks down? What if business slows down and I need some extra cash? My first step is to "shop" around for local community banks who are still lending to responsible business owners with good credit and if you're in the same boat as I am, I recommend you do the same.

Josh Lee
Daily Interactions With The World

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