This is not the voice of the Old man who has the experience of years as an investment banker. This is the Other Old War Horse who has ages and ages of experience of financing small businesses, OK that's for 25+ years.

The companies I have financed include small trucking companies, coal, oil and gas operations including gathering systems for gas wells, machine shops, auto repair shops, construction operations and many others. As you can see I have finance a cross section of industries and businesses.

In the credit market of today I find that the average small business person is not prepared to secure funding for their companies. Is this your fault, probably not as in most instances your bankers were not prepared for what has happened. Everyone is asking what is your interest rate? What they should be asking is, "Can you get me money?"

If you walk into your branch where you have banked for a few years you will notice a few changes. First, and most important, is the person whom you started with in the beginning of your relationship with the bank is probably no longer there.  Next, one year ago if you had a 720 credit score they would extend to you an unsecure line of credit anywhere from $10,000 to $50,000. In fact, there were some banks that would give you a 100,000 non secure line  (even if you had never done business with them, or you had been in business for two years and had a 720 credit score). Guess what? These days the same bank will not give you a credit card for 5,000. Why? What happened you may ask? Underwriting (or lack of proper underwriting) and the general United States lacking credit policies almost took down the rest of the world’s economy. It was a great party but now comes the hang over and it is going to be a doozy. How long will it last? In my opinion I will never see the easy credit of one or two years ago in my working lifetime and I am... well, let's just say really mature, and hope to work for at least another six years to eight years.

So what do we do? Do we just shut the doors? Of course not, we will grow out of this but we have to go back to prudent business and credit. In the future you are going to need collateral for loans and businesses will borrow using their assets to grow like a business should. 

"What if I am a service business and I do not have collateral?”  You’re mistaken! You have collateral even when you do not know it! Your equipment such as desks, computers and copies, When you perform a service and invoice a client that invoice becomes collateral and yes we can loan you against the invoice. Talk to us.  Let us point you in the right direction of solutions and options.  There are options and ways to get to where you want to be!

Article written by Howard Stokes - Blue Water AE