Credit crunch hurting entrepreneurs
DALLAS – Sept. 16, 2008 – The capital markets crunch has hit Main Street, leaving many entrepreneurs in need of financing in the lurch.Take Don Scribner, a former engineer who decided to buy a seafood restaurant in Hurst, Texas, one that had been in business for nearly 20 years and had strong cash flow.He thought the deal would appeal to bank loan officers, but they proved coy.One bank that seemed interested in making him the $300,000 loan changed its lending requirements midstream, deciding it would no longer lend money on restaurants without real estate. (The eatery was leasing its space.)Scribner found another lender and spent a month filing paperwork. But three days before that loan was to close, the bank pulled out.“They never called me back,” he said. “They didn’t want to talk about it.”Loans that banks would have approved readily a year ago don’t pass muster today.“It’s just like in the home market,” said Alex Vantarakis, who runs a business brokerage in Dallas. “Everything has to be perfect. Otherwise, the whole package is shot down.”Even in a good economy, entrepreneurs find it harder to raise money for their projects. Today, they face the tightest credit market in nearly a decade.Vantarakis’ company connects buyers and sellers of small companies, giving him a front-row seat to the turmoil’s impact on Main Street. He didn’t see it at first, he said, but realizes now that lenders started pulling back on capital around the first of the year, regardless of how solid the underlying business.Some businesses, such as printing companies and gas stations, have been deemed too risky and are not being funded. Anything to do with the “c-word” – construction – is radioactive, business brokers say.“It’s weird because it’s not the same criteria at every bank that’s being changed,” Vantarakis said.Adding to the difficulty, brokers say, is a change in the U.S. Small Business Administration’s rules regarding certain types of loans. For example, the agency will no longer guarantee the goodwill portion of a loan for a service company.But that should affect only a small number of loans, said Herbert Austin, director of the SBA’s North Texas district office.The SBA can guarantee loans only after they’re made by banks, he said.“If the banks have chosen to look at credit differently because of market conditions, we don’t have that much control,” Austin said. “We don’t make direct loans.”The money spigot is not likely to open up further anytime soon. The Federal Reserve recently reported that the share of banks tightening loan availability to small businesses surged to a record high of 65.3 percent in the third quarter, up from 7.7 percent a year ago, according to its monthly survey of senior loan officers.So entrepreneurs continue to court bankers, pitching the fundamentals of their business ideas.Business brokers say the tight credit market is causing some business owners to postpone offering their firms for sale.“We have noticed a slowdown in the number of listings,” said Dan Hall, managing director of brokerage Alamo Corporate Group in Dallas. “Business owners hear of all of this and are reluctant to go to market.”Vantarakis said he’s trying to stay focused on the long term. Despite a drop-off in deal volume, he’s invested about $3,000 in a new Web site and hired a telemarketer and business development officer.Banks might be pulling back, but he said he can’t.“I’m spending more money now than when I was having a good deal-flow,” Vantarakis said. “My cycle is six or seven months ahead. If I cut back now based on current conditions, I’m affecting deal-flow a year from now.”Allowing that to happen, he said, would just prolong the pain.
Lew's Mach Speed Stick Rod Review
2 months ago