Our local paper, the Daily Hampshire Gazette, ran a couple of articles recently that really got my attention. In the February 15 edition, they profiled area bank CEOs who were bleating that while they have lots of money to lend, no small businesses are asking for it. Today's paper showed a much different side of the story: An Amherst businessman, Nick Seamon, detailed his quest for a small business improvement loan. Four tries netted him four refusals.
Seamon owns the Black Sheep Deli, an Amherst eatery in business 23 years. When he heard about the America's Recovery Capital program, whereby federal loans to small businesses would be backed by the Small Business Administration, Seamon contacted several banks, all of whom refused him. This is strange, since the Obama administration conceived this program specifically to help small businesses weather the recession as well as take the risk off of area banks, thus encouraging them to make these loans. What was going on?
Monday's article sheds a little light. According to four local bank CEOs, small businesses simply aren't asking for money, which is why they aren't getting any. Not only that, but the banks in this area are well capitalized, meaning they don't even need the $30 million in paid-back Troubled Asset Relief Program money that the federal government is making available for these loans. Meanwhile, today's article published the "Top five reasons why businesses were denied financing in the past 12 months": Insufficient revenue (37%); start-up business (23%); insufficient collateral (13%) bad credit (13%) and, my favorite, bad economy (13%). Does this sound to you like businesses aren't trying to procure loans?
The sad truth appears to be that the banks simply don't want to lend money to small businesses and individuals, and, gosh darn it, they ain't gonna. The four titans of finance interviewed for the first article crowed about how the savings rate has been increasing, which means more deposits for their bank. They obviously don't feel the need to give back, however, by providing credit to the community that boosts their banks' bottom line.
But Seamon has taken matters into his own hands. He is issuing "deli dollars" to customers, thereby raising the capital he needs to make repairs and renovations to his business. I think he's on the right track. How else to teach these big blowhards, who don't blink at taking our money for their own use without ever returning the favor, a good lesson? Let's bring back the community Savings and Loan and Building and Loan, where customers know where their money is coming from. Everybody pitches in and everybody profits. After all, that's the way things started; maybe it's time to start over again, and cut the big guys out. Now, there's a "downsizing" idea I can believe in.
Seamon owns the Black Sheep Deli, an Amherst eatery in business 23 years. When he heard about the America's Recovery Capital program, whereby federal loans to small businesses would be backed by the Small Business Administration, Seamon contacted several banks, all of whom refused him. This is strange, since the Obama administration conceived this program specifically to help small businesses weather the recession as well as take the risk off of area banks, thus encouraging them to make these loans. What was going on?
Monday's article sheds a little light. According to four local bank CEOs, small businesses simply aren't asking for money, which is why they aren't getting any. Not only that, but the banks in this area are well capitalized, meaning they don't even need the $30 million in paid-back Troubled Asset Relief Program money that the federal government is making available for these loans. Meanwhile, today's article published the "Top five reasons why businesses were denied financing in the past 12 months": Insufficient revenue (37%); start-up business (23%); insufficient collateral (13%) bad credit (13%) and, my favorite, bad economy (13%). Does this sound to you like businesses aren't trying to procure loans?
The sad truth appears to be that the banks simply don't want to lend money to small businesses and individuals, and, gosh darn it, they ain't gonna. The four titans of finance interviewed for the first article crowed about how the savings rate has been increasing, which means more deposits for their bank. They obviously don't feel the need to give back, however, by providing credit to the community that boosts their banks' bottom line.
But Seamon has taken matters into his own hands. He is issuing "deli dollars" to customers, thereby raising the capital he needs to make repairs and renovations to his business. I think he's on the right track. How else to teach these big blowhards, who don't blink at taking our money for their own use without ever returning the favor, a good lesson? Let's bring back the community Savings and Loan and Building and Loan, where customers know where their money is coming from. Everybody pitches in and everybody profits. After all, that's the way things started; maybe it's time to start over again, and cut the big guys out. Now, there's a "downsizing" idea I can believe in.
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