The credit crunch is on its way. It has already begun in the mortgage world and will likely spread to other areas of the economy which many worry will effect the stock market and potentially drag the US economy into recession.
The Fed can have some impact on this ripple effect and is being watched closely for indication of how they will handle this potential threat to the economy. However, there will likely be an impact to your ability to get credit and access capital.
While away last week I came across a very good article in the Wall Street Journal (read here). It outlines the potential problems on the horizon for small companies looking for capital and gives some solid ideas on how best to prepare for a credit crunch.
As always, advance planning is the best approach and our CARE Program outlines several steps to position you for more and better capital.
Read this article and take the steps now to prepare for future credit needs now.
{ 3 comments… read them below or add one }
After reading the article you linked to the Wall Street Journal in your post, I am even more concerned than I was before.
I am a frustrated established business owner trying desperately to keep pace with a competitive market.
I’m currently sustaining my business expenses with my personal credit cards, and I have been doing so for quite some time.
I have successfully maxed out each of my personal credit cards.
Because of this situation, I am trying to get a loan in an effort to pay off all my personal credit cards and then, hopefully, be able to establish a business line of credit.
However, I find that most banks view me as a considerable risk because of my maxed out credit cards, and each attempt I make to acquire a loan is denied.
I am not quite ready to give up on my business. It is all I have.
I believe that by paying off my personal credit card balances I will take the noose of the neck of my business.
With a business line of credit, I will be able to allow my business an opportunity to stand on its own two feet.
What options are available to me to help resolve my business situation?
According to the Wall Street Journal article in the post, entrepreneurs like me need to act fast or we may find it more difficult in the future to acquire a line of credit.
Is this really the bottom line?
I would like to change my home-based business, because I have outgrown the space.
Right now, I need to locate a physical location for my business and acquire the proper equipment and safety gear, to conduct my classes.
My problem is that I have no cash to pursue my business venture.
What I am looking for is a small business start up loan, preferably an unsecured business loan.
I’ve been having problems getting a loan, because I don’t have enough collateral.
Can anyone offer me some guidance, advice, or even a reliable resource that will cater to a person in my situation?
Considering the article, my time is running out.
I read the article as well and agree with Rob and Ralph.
I, too, now worry if I should step up my pace as far as my business objectives.
I have great credit. I’ve paid off previous bills, and I’m paying my current bills on time. But because of the current level of actual activity in my business, I want to expand my services.
This expansion has the potential to increase my bottom line. But this expansion requires additional equipment and money that my business does not have.
Because I placed so much faith in my ‘great’ credit, I approached several banks and applied for a loan with a business line of credit for $350,000.
Just like the article implies that banks have tightened their purse strings, I was informed, by each back I approached, as a matter of fact, that because I am writing off all my expenses to the bottom line of my business, I did not qualify for this type of loan.
The banks I approached were basically telling me that my business is not making enough income.
What existing small business loan resources cater to business owners in my position, considering that the credit industry is about to hit a crunch?
I am desperately trying to keep pace with a highly competitive industry.