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How to Cope with Credit Issues

Posted by: Rod Kurtz on May 22, 2009

Savvy small business owners are finding ways to cope with credit issues and keep capital flowing. Here are some ideas:

• First and foremost, don’t panic. The evidence suggests that credit problems have not spread in a major way to Main Street businesses, though some owners are seeing a change in their bank’s willingness to extend credit, reflected by smaller lines of credit and/or higher interest rates.

• Start making friends with your local community banks, as they have funds to lend.

• See what your bank is doing by checking the FDIC Web site at to learn whether they made loans affected by the mortgage crisis. Most community banks are not involved.

• Keep in touch with your banker and renew your friendship. If needed, update information related to any loans you may have. Let your banker know that you care about your relationship, are a good long-term customer, and want to continue that relationship.

• Make sure you’re managing 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. This will improve your balance sheet and show your lender you are on the job.

• Check your credit report with a major credit reporting agency (Equifax, Experian, or TransUnion) and make sure it’s accurate. Correct any erroneous entries.

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

By following these tips and sound cash management practices, you can head off any cash flow problems.

William Dunkelberg
Chief Economist
National Federation of Independent Business

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