Small biz: Lots of gloom and doom, little data

His road is paved with credit
At the other end of the spectrum is Jim Roemer, who runs a chauffeured car service in Kaukauna, Wis. He said he has had no trouble obtaining financing to add three vehicles to his fleet this year, including the purchases of a new $46,000 Cadillac DTS and a new Cadillac Escalade on which he received 100 percent financing from GMAC. The deal on the Escalade, valued at $75,000, was finalized Sept. 30.

“It seems hard to believe that the credit markets are so tight based on my own circumstances,” Roemer said. “I do not have the greatest credit” after declaring bankruptcy in 2005. “Since then I have gotten four credit cards plus three loans for my business.”

Somewhere in between Roemer and Wolfe is Utah baker Brian Smith, who said the credit crunch is “really hurting” his family’s business but not threatening its survival. With his parents, Smith operates Pierre Country Bakery, which sells natural breads and pastries to retail customers and 55 wholesale accounts in the Salt Lake City area. The business garners $1 million in annual sales and employs 25 workers.

With prices from suppliers up and sales dropping, Smith, 30, went looking for financing that could help fund expansion and tide the business through its fall slowdown. “We have perfect credit, a score of 770 and you cannot get anything,” he said. “They’re just kind of like, ‘Well, we’ll get back to you.’”

He said the tightening credit markets have also made it impossible to consummate a deal to sell the bakery because the prospective buyers, who already own about half the business, cannot obtain financing for the rest. He finds that a real puzzle since the well-known bakery has been in business for 20 years and churns out 500 loaves of bread and 350 pastries a day.

J. Michael Feeks, who spent 30 years in the banking industry and is now a principal in the Bank Experts Group consulting firm, said he doesn’t put too much credence in “anecdotal stuff going around” about the impact of the Wall Street meltdown on small business credit lines.

“I’d be very careful of that,” he said. “Bankers are very reluctant to do anything that is going to make a situation worse. I just can’t imagine too many banks pulling back on the credit lines that are financing receivables, inventories, things like that. That would really hurt the business of the customer and you’d end up with a bad loan.”

Location, location, location
Geography also plays a key role in the fate of small business. Credit and revenue concerns are not the same in an Idaho boomtown as they are in a Detroit suburb.

Feeks, who also is the chief financial officer of the tech firm Concurrent Technologies Corp., with 50 employees and $10 million in annual revenue, said his own company has an ample credit line that has not been affected by the economic turmoil.

That’s no consolation to former candle maker Wolfe, who said that until she can get up to speed with her real estate career, the credit crunch has moved from the business realm to the home front.

“We are $1,500 in the hole every month,” she said. "We are trying desperately to work with our mortgage company to get some relief until this crisis is over.”

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