Small businesses represent 50% of the U.S. economy and virtually 0% of the recent bailout. And, while everyone tosses out trite phrases such as, do more with less, the small business owner can’t help but ask, how do you do more with none?!
In a recent Vistage survey of their executive members across the United States, 85% reported that they don’t believe Washington is listening, and 65% stated that the National Health Care legislation will actually be bad for business health. Washington’s response to the dire small business situation includes a mandate that 23% of the$500 billion be contracted exclusively to the small business owner, a waiver of the typical 3% loan fees, and an offer to increase the loan cap from $2M to $5M. This could be potentially helpful if it were not for the significant detail called “access”: business owners remind Washington that the loan application for even the $2M is onerous at best, and that legislation is so complicated it would require a full time employee just to figure it out. And, of course… that new employee will require additional health insurance and benefits!
Chris Reilly, President of CIT Small Business Lending Corp, a division of CIT Group, Inc., says that loan delinquency levels reached an historic high, “but they are starting to plateau, which is the good news.” CIT’s small business portfolio is around $4B and she believes that if small business owners have made it this far, “it will be a huge opportunity for them” in the year ahead. “These past two years have been a stress test. Those that survive have an opportunity in front of them.” She cites that from her perspective there are two common factors in small business failure. “Two reasons businesses fail are the lack of appropriate management experience and poor planning. If they can’t deliver quality to the customer and they can’t anticipate the future, they won’t survive. The surviving dry cleaner in your town cut costs and they didn’t screw up your shirt in the process,” Reilly cited anecdotally. She did not, however, mention the $2.33B of TARP money that saved CIT and what management deficits may have led to her bank’s crisis. Nonetheless, Reilly is more than happy to loan money, and she says there are several ways to make the entire process easier for you and the lender which can put you back in control of creating your own bailout.