Go to the mobile version of this Web site.

Login | Contact Us | Site Map | Paid archives | Electronic edition | Subscription Questions | Extras

Credit-worthy small businesses can still get capital

By Jeff Smith, Rocky Mountain News (Contact)

Published November 4, 2008 at 9:05 p.m.

Text size  
Greg Lopez calls small business backbone of the economy.

Greg Lopez calls small business backbone of the economy.

More More Business

More stories »

Greg Lopez, Colorado District director for the U.S. Small Business Administration, recently assembled a "blue-ribbon" panel of 12 commercial lenders to brief him on the market turmoil.

The finding: Capital is still readily available to credit-worthy small businesses. But businesses need to understand their financial situation and be transparent about it to bankers.

"Bankers don't like surprises, so if there's something you may feel you don't want to share, you probably should share it with your bankers," Lopez said.

He also said it's a good time to pull one's business plan from the shelf and re-evaluate it. It's not business as usual, Lopez said; rather, business owners must look for creative ways to minimize expenses, and be hands-on in making sure fundamentals are in place, such as a good accounts receivable system.

"With consumer confidence low, perhaps it's not the time to worry so much about marketing but worry (instead) about your existing customer base."

Regardless of the election results, Lopez said he was confident the SBA would be asked to help the country get out of its crisis, and he said his office will be putting together new programs to reach out to small businesses.

"It's no secret that small business is the backbone of the economy," Lopez said, noting that nationally, small businesses create 60 percent to 80 percent of all net new jobs.

Lopez talked Tuesday about small-business issues amid the recent turmoil. Excerpts of the interview follow:

What kinds of concerns are being expressed by small businesses?

One of the concerns, of course, is liquidity and trying to get capital for payroll (and other needs). Small businesses are concerned about lines of credit and how they are being readjusted by financial institutions. Of course they're seeing revenues being impacted by the slowdown of the economy. Trying to figure out how to maintain my business at a level where I can continuously operate without having to lay off employees and/ or, a worst-case scenario, shutting my doors.

What are you telling them?

What we're telling them is that they need to go in and talk to their banker sooner rather than later to let them know what kind of situation they're facing. One of the things we're trying to encourage is for all small businesses to look into the future. What's the best- case scenario for the next 90 days, what's an acceptable scenario, what's the worst-case scenario? We have resource partners that can assist them in that forecasting - the Small Business Development Centers, SCORE chapters and Mi Casa.

Are you noticing more small businesses seeking assistance right now?

I think more small businesses are reaching out, trying to find answers to their problems. Every business is facing something unique and different. While there are some that are reaching out, our concern is that there's a huge number of businesses that are paralyzed, not sure which way to turn. Those are the ones we really want to encourage to reach out, not only just to the SBA but other organizations.

How bad is it out there? Is there a real credit squeeze?

In Colorado, probably not as bad off as other parts of the country. Banks have capital available to lend. However, they are re-evaluating and sharpening their pencils and they look to see how much a business already is leveraged. The struggle is how everyone finds a comfort level where no one feels they're taking an unnecessary risk. The SBA is working strongly with lenders to remind them we guarantee their loans to minimize the risk of the bankers.

Were there any surprises from the blue-ribbon panel?

A: That there are loans that have been approved and authorized and some of the small-business owners were not ready to sign on the dotted line, due to the fact that some are waiting to see what the election is going to bring, what the economic picture is going to look like in the fourth quarter.

Even business owners are being very prudent and conservative in taking on additional liability. And that's encouraging. They don't want to make a wrong decision.