Keeping Your Capital Flowing During a Credit Crisis

Posted by: Rod Kurtz on November 18, 2008

As dismal as things may sometimes seem, it is possible to make your small business thrive even when credit is tight. Here are seven keys to keeping your capital flowing:

1. Don’t panic. Get the facts before reacting. Find out if you are facing a change in your bank’s willingness to extend credit, reflected by smaller lines of credit and/or higher interest rates, or something else.

2. Branch out. If your banking relationship is with a mega bank, start making friends with your local community banks.

3. Educate yourself. Find out if your bank loan is affected by the mortgage crisis by checking the FDIC’s summary of deposits Web site. Most community banks are not affected.

4. Keep in touch with your banker and renew your friendship. Update information related to any loans you may have. Remind your banker that you are a valuable, long-term customer who cares about continuing the relationship.

5. Manage your cash well. Don’t invest in inventories that you may not need or make capital expenditures that aren’t currently required for the business. Doing so improves your balance sheet and demonstrates vigilance to your lender.

6. Check your credit report for accuracy and correct any erroneous entries with the major credit bureaus (Equifax, Experian, and TransUnion).

7. Manage your accounts receivable, especially if they’re collateral for any loan. Make sure your lender knows that they are good assets.

William Dunkelberg
Chief Economist
National Federation of Independent Business
Nashville

Post a comment

 

About

Want to improve the way you run your business? Entrepreneurs, academics, and consultants from diverse industries offer practical advice on a variety of topics each business day.

To submit a tip for consideration, first check our archive of previous tips to make sure you're not repeating a tip someone has already contributed. Then send the tip to Small Business channel contributor Michelle Dammon Loyalka. Because of the volume of material she receives, she may not respond to each individual.

BW Mall - Sponsored Links

Buy a link now!