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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.
National Federation of Independent Business
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