Categorized | Business

Entrepreneur

Turnabout?

By Tom Irmen

I experienced an unusual turn of events recently that was rather notable. I had a bank, a large regional bank, asking if perhaps I was considering any future borrowing to finance a potential business expansion.

To set the record straight, we’re not considering any expansion that would require financing. Nonetheless, this particular bank is somewhat perplexed, as they and many of their competitors don’t seem to be participating in the economic recovery, at least as it relates to small business lending.

This was a strange turn of events from just a few short years ago when financing was largely unavailable to small businesses. In fact, many banks “called in” loans from a variety of small businesses, a decision that severely jeopardized their existing operations, and in some instances caused the failure, or near failure, of many of these same businesses.


One of the great pleasures I derive from my publishing career is my ability to interact with hundreds of small businesses on a regular basis. You listen to their stories, share in their successes, and, sadly, experience firsthand an occasional failure.

In our three decades as small business owners, we have navigated a number of recessions but none as devastating as the most recent one. One thing is for certain – few of the business owners I visit with on a regular basis will forget the lessons of this recession, the largest since the Great Depression, anytime soon.

During the last several years, small businesses have consolidated, eliminated marginal products and services, trimmed staff, improved productivity, and paid down debt. Today we manage more streamlined versions of our former businesses and have little appetite for any expansion requiring financing. Add to this the economic uncertainty moving forward and the lessons of the past, and what remains is a great many small business owners who have elected to avoid borrowing.

What does the future hold? For the banks, I’d suggest finding an alternative use for their unproductive capital. Small business owners have an aversion to borrowing at the present time. The recent recession is fresh on their minds, as well as the many negative stories of banks refusing to help struggling small businesses, the same banks that were the recipients of $431 billion in bank bailout funds from American taxpayers, many of whom were the same small business owners whose requests for assistance went largely ignored.

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