Are you feeling a bit like it doesn’t matter which direction you turn, you and your business are being lambasted by credit crisis crazies? Have you had:
- Lines of credit reduced or eliminated?
- Letters of credit cancelled?
- Account limits reduced significantly?
- Credit card interest rates increased?
- Short-term loans refused?
- Business loans rejected?
- Mortgage loans turned down?
- Car loans unavailable?
- Student loans stopped after approval?
Count yourself among the many although that is no consolation as you work to keep your business and yourself afloat. These are brutal times from a credit perspective, which seems immensely unfair because our whole economic system now functions around the active use of credit. Short-term loans fuel businesses to buy everything from fertilizer for the crops that feed our nation to steel that is machined into automobile parts to funds for mid-month payrolls. With access to credit frozen, lowered, or gone businesses must figure out how to survive. This can occupy far too much time, which should be devoted to doing your real work. The combination of today’s challenges is causing high levels of frustration.
As a serial entrepreneur with a passion for small business, I encourage you to fight for your company if you believe there is a market for your goods or services, which will thrive if you can weather the current economic downturn.
There are few things more difficult than thinking creatively when you feel as if you’re being hammered emotionally. When we pour our energy, time and spirit into a business only to have the economic system change the game rules, it feels personal. It’s not. To clear your head so you can construct effective solutions, you must shake off any martyr tendencies. This is not about you, even if you never had the best relationship with a creditor. The whole freakin’ country is feeling the credit constriction. Heavy equipment manufacturer, Caterpillar, was recently refused a short-term loan. Venerable General Electric had to issue stock to raise needed cash. As much as it might seem personal, the lack of available capital is not about you.
Potential Creative Approaches
Find a new bank. In many communities, some banks are lending while others are not. If your bank has cancelled your line of credit or taken some other action that limits your access to cash for no apparent reason, it’s time to go bank shopping. Start with your local community and regional banks. Some of them have adhered to more stringent requirements during the recent go-go lending era and now they are in stronger financial positions, with money to lend. Don’t accept the decision of your usual bank as the only available financial institution decision for your business.
Barter with key suppliers. For some businesses, this can be highly rewarding although it’s not something we usually think about. Can you trade products or services for supplies you need? If so, be certain you’re trading retail price for retail price or wholesale for wholesale since a mixture can end up with a feeling of inequity.
Take on an individual investor, who becomes part of your business. If you don’t want a long-term partner, it may be possible to structure a relationship that gives you the right to buy out the investor after a specific time period. Since conventional wisdom has now pushed economic recovery out through 2010 and we have no way to know what additional crises could befall us, allow your business sufficient time to build-up revenue and structure a buy-out.
Ask for investments from friends and family. If you have an established business or a track record of business success, you may discover there are friendly investors who would feel much better about supporting your business with a guaranteed rate of return than speculating on more volatile investments during this uncertain economy.
Consider a loan from FirstAgain.com. For individuals with excellent personal credit histories, FirstAgain is a unique, high caliber, customer-focused, speedy lender. Remember, when you access cash for your business using personal credit, you will want to (legally) loan the money to your business, ensuring a separation of your personal and business credit. Pay yourself back just as you would repay any loan.
Depending on the nature of your business and your target markets, the rocky terrain may continue to be rough going for the next couple of years. When change is required for survival, it’s important to keep an open mind and search for fresh approaches to your specific challenges. Surviving, even thriving, is possible when we think creatively and realize the focus of our business during an economic downturn may be much different from the company you plan to develop into when the path smoothes and the market is better for you.