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If Things are Tight

Aug 28, 2009

I am hearing from many entrepreneurs that over the last several years their business had been getting by while the economy was cooking along, but when the consumer started to cut back on spending, especially on non-essential items, they began to feel the pinch.

 

Every business is positioned differently in terms of overhead, employees, debt structure and the owners personal ability to withstand a slow down.  Therefore there is no one answer to the question, "What should I do?"  However, here are some things you might consider if applicable.  If you have outstanding debt, talk to your lender about possibly restructuring it so that you are afforded some short-term payment relief.  It is often in their best interest to work with you through a toughh time rather than having to liquidate the business.  In addition, a new SBA program called ARC (American Recovery Capital) may also be an option.  Can you make better use of your employees and gain some efficiency there?  Salaries or wages are often one of a businesses larger expenses.  Is your marketing working?  You need to keep marketing as stopping will likely make matters worse, but could you make better use of those marketing dollars by changing the mix?

 

If you are seeking new funding, a lender may look to an SBA guarantee to make them more comfortable in loaning you the money.  Currently, the SBA has made it more attractive for lenders to use their program by providing higher guarantee percentages, and more attractive for borrowers by reducing or eliminating guarantee fees borrowers are usually required to pay.  Please note that the SBA does not generally make loans directly, but rather you would work through a conventional lender and they would seek the guarantee if they feel it's necessary.  For more information on the SBA programs go to www.sba.gov.  If you need assistance in developing a loan request or analyzing your current financial picture, contact your nearest Small Business Development Center and we'll be glad to help.



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Bruce Morse


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