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NORTH BAY – Small businesses all over are disturbing with clamminess during this recession and are accepting to about-face aback to added acceptable agency of blockage in the black.
“The inability of the small business owner to tap their home equity line — or the unwillingness for the time being if they still have the ability to borrow — certainly has and will continue to have an impact on small business financing,” said Richard Grant, senior vice president of First Community Bank. “Historically as borrowers have sought small-business financing for business acquisition purposes or real estate purposes, they have been able to use this equity line of credit as a source of their equity contribution.”
Most financial advisers would agree that changes, such as creating capital and not working completely off of loans, is the best way to go.
But it also has a great deal to do with timing, said Bob Bernard, certified public account and partner at Brush Bernard Mitchell CPA in Healdsburg.
“In 1998 if I took out a bunch of loans and aggressively built my business and was able over time to pay it down, I was smart. But if I did the same thing in 2007, exactly the same thing, does that make me dumb?”
Without a doubt, people need to get more creative in their solutions, said Russ Colombo, president and chief executive officer of Bank of Marin.
“It is going to force them to look at business opportunities differently. You can’t finance everything on borrowing.”
Being diligent about collecting receivables and raising money from partners, friends and family will play a role in which businesses stay open and which businesses do not, said Mr. Colombo.
”Businesses have to watch inventory,” he added, “and find ways to do more with less.”
He said an employee is really 1.4 times the cost of their salary when the benefits package is added in.
Eric Aanes, president of Titus Wealth Management in Larkspur, said cross training employees to do different tasks, automating programs and database management are all ways businesses can use technology to stay afloat.
He said people are not growing their businesses, and the consumer is ultra tight with their dollars.
“I don’t know any business in any industry that isn’t down 20 percent. The majority of them are down 15 to 25 percent,” he said.
“My personal view is that we are addicted to consumption. We will do it at all costs. We are addicted to buying things, but we should still see growth.”
Mr. Bernard agrees. “While businesses may be down 10 or 20 percent,” he said, “it has been up 50 percent over the last five years. I have a lot of clients who are doing well. Not everything is all doom and gloom.”
And at Charter Oak Bank in Napa, collaboration is the key, according to President and CEO Brian Kelly.
“It is not the end of the world,” Mr. Kelly said. “Banks are lowering interest rates, which is keeping people in a cash-flow position. I have yet to hear of a local business going out of business.”
Mr. Kelly adopted a Skip-Your-Payment program for the month of December.
“This payment-deferral offer will help alleviate financial stress that may be affecting some customers as a result of the current economic state of the country.”
According to Mr. Kelly, the purpose of this offer is to help customers with near-term cash flow during the holidays.
“We recognize that this is a difficult time for many people, and we want to be supportive of our customer’s needs by offering this program.”
“Ultimately, the businesses that are going to survive are the ones that are not as leveraged,” said Mr. Colombo. “You have to look at all scenarios. It is not ‘What if you lost X percent’ anymore. It is ‘What if you lost X-times-two percent.’ Hope for the best, prepare for the worst and make sure the worst you are preparing for is bad enough.”
“The inability of the small business owner to tap their home equity line — or the unwillingness for the time being if they still have the ability to borrow — certainly has and will continue to have an impact on small business financing,” said Richard Grant, senior vice president of First Community Bank. “Historically as borrowers have sought small-business financing for business acquisition purposes or real estate purposes, they have been able to use this equity line of credit as a source of their equity contribution.”
Most financial advisers would agree that changes, such as creating capital and not working completely off of loans, is the best way to go.
But it also has a great deal to do with timing, said Bob Bernard, certified public account and partner at Brush Bernard Mitchell CPA in Healdsburg.
“In 1998 if I took out a bunch of loans and aggressively built my business and was able over time to pay it down, I was smart. But if I did the same thing in 2007, exactly the same thing, does that make me dumb?”
Without a doubt, people need to get more creative in their solutions, said Russ Colombo, president and chief executive officer of Bank of Marin.
“It is going to force them to look at business opportunities differently. You can’t finance everything on borrowing.”
Being diligent about collecting receivables and raising money from partners, friends and family will play a role in which businesses stay open and which businesses do not, said Mr. Colombo.
”Businesses have to watch inventory,” he added, “and find ways to do more with less.”
He said an employee is really 1.4 times the cost of their salary when the benefits package is added in.
Eric Aanes, president of Titus Wealth Management in Larkspur, said cross training employees to do different tasks, automating programs and database management are all ways businesses can use technology to stay afloat.
He said people are not growing their businesses, and the consumer is ultra tight with their dollars.
“I don’t know any business in any industry that isn’t down 20 percent. The majority of them are down 15 to 25 percent,” he said.
“My personal view is that we are addicted to consumption. We will do it at all costs. We are addicted to buying things, but we should still see growth.”
Mr. Bernard agrees. “While businesses may be down 10 or 20 percent,” he said, “it has been up 50 percent over the last five years. I have a lot of clients who are doing well. Not everything is all doom and gloom.”
And at Charter Oak Bank in Napa, collaboration is the key, according to President and CEO Brian Kelly.
“It is not the end of the world,” Mr. Kelly said. “Banks are lowering interest rates, which is keeping people in a cash-flow position. I have yet to hear of a local business going out of business.”
Mr. Kelly adopted a Skip-Your-Payment program for the month of December.
“This payment-deferral offer will help alleviate financial stress that may be affecting some customers as a result of the current economic state of the country.”
According to Mr. Kelly, the purpose of this offer is to help customers with near-term cash flow during the holidays.
“We recognize that this is a difficult time for many people, and we want to be supportive of our customer’s needs by offering this program.”
“Ultimately, the businesses that are going to survive are the ones that are not as leveraged,” said Mr. Colombo. “You have to look at all scenarios. It is not ‘What if you lost X percent’ anymore. It is ‘What if you lost X-times-two percent.’ Hope for the best, prepare for the worst and make sure the worst you are preparing for is bad enough.”
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