Some small companies say they are no longer able to get loans from newly cautious banks as credit tightens across the country, and even those who do qualify are increasingly reluctant to borrow and expand, fearful of overextending themselves in the midst of the financial crisis.
Alan Petrucci, whose small factory near Chicago makes metal molds that other manufacturers buy to form plastic parts, says his bank recently offered him an additional loan. Though orders for his molds are still plentiful, Mr. Petrucci says he will borrow only to upgrade existing machinery, not to expand.
“We are bracing for the downturn that is coming,” Mr. Petrucci said. “It is coming; there is no question about that.”
Mark Snyder, another businessman, is more optimistic, but his bank refused two weeks ago to grant another loan to his fledgling medical supply company near Denver. So he turned to a commercial lender, which has offered credit ”” at 30 percent a year. Mr. Snyder does not want to borrow much at that rate. “We desperately need more capital to grow our sales,” he said.
The majority of Americans writing their representatives and senators say they’d rather risk dealing with a depression than spend in the neighborhood of $700 billion dollars fixing a problem they had little to do with.
One way or another the piper will get paid.
Let me apologize in advance for the cynicism – but the “chill” will soon be all warm and fuzzy in NY Times Land once Obama is elected….
Lots of easy money leads to clusters of stupid decisions. Really tight credit may be one of the best things to happen to American business in a generation.
I run a business, and it isn’t a lot of fun competing against foolish money, borrowed much too easily, at an unrealistically low rate of interest. It distorts the entire market, rewards hubris and folly, and punishes prudence and stewardship.
The sooner such nonsense is squeezed our of the economy, the better.
Chris ole boy, you hit the nail on the head. Directly on target–that nail is down all the way….
bl