Sunday, September 12, 2010

Journey Of A Small Business Owner #6 - Financing

For a long while, the television refused to let anyone ignore that banks were not making loans and small business were in dire needs for those loans. We kept hearing that some businesses couldn't make their payroll because they couldn't get short term loans from the banks, and I thought, "well, if you have to borrow from the bank to make a payroll, your business isn't run right."

I still believe that. But our own experience with the banks did validate that claim. As individuals, we had a spotless credit history, but as a new business, Tango Zulu Imports had no credit history. Even though I could have purchased an automobile on my personal credit card, the same bank would not issue me a credit card for the business with enough credit to buy a tricycle.
So was it the case that after careless lending that led most banks to the brink of collapse and some over the edge, banks were now overly cautious? Clearly not all of them. Another bank that I have not done any business for several years has a standing offer of a large line of credit at rock bottom rate. Even the bank that made such as fuss about approving a lousy $500 credit card line, when we showed little interest, mysteriously approved a business credit card with credit line 40 times more than we cared for.

There are many hurdles along the path of starting a new business. Dealing with banks and its strange responses was the smallest of them.

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