Home Archives November 2008 No surprise: credit squeeze hits home

No surprise: credit squeeze hits home

| Print |  Email
Saturday, November 01, 2008

STATEWIDE Small businesses throughout Oregon that rely on credit to keep operations going may find unwilling lenders as the economy worsens.

The downturn has Oregon Business Association president Ryan Deckert so concerned for small businesses that he asked state congressional representatives to vote for the federal $700 billion bailout plan in October.

“If we can just get confidence injected back in the system,” he says. Small businesses throughout the state are coping by “hunkering down” he says. Nationwide the Federal Reserve says short-term loans to businesses are down 14% from last year.

The stakes are high for the state’s overall economy. The Oregon Small Business Administration classifies 95%, or 300,000, of the businesses in the state as small.

Bad bets on the construction and real estate industry are on the books of many banks in the state, which has subsequently restricted access to credit. Now banks are scrutinizing everyone  they lend money to, experts say.  “Everyone is looking at their underwriting standards,” says Linda Navarro, president of the Oregon Bankers Association. “Some businesses are having a harder time finding credit.”

That includes banks, too. The downfall of some big banks has hindered the ability of regional community banks such as Medford-based People’s Bank of Commerce to take out short-term loans they then extend to businesses, says spokesman Kenneth Trautman. When small businesses come looking for a loan, “We verify their financial statement a little closer.”

Many banks in the state say they have money to lend, though it’s tougher loan terms like collateral and the number of years in business that may pinch the credit pipeline. Collateral is often the small business owner’s home, but real estate values have dropped so much that may no longer be enough, Trautman says.

The credit climate looks to be discouraging startups, too. Trautman says he used to get at least three new businesses a week looking for credit. Now he’s getting none.

At Hillsboro-based Columbia Community Bank very few, if any, unsecured loans are being given to small businesses, says Rick Roby, a bank executive. No loans are being given out for real estate-related businesses, he says. For existing clients already on the bank’s books, “We are loaning for operating expenses.”

The Oregon SBA for fiscal 2008 has given out 27% fewer loans than in fiscal 2007 (1,575 to 1,143). But the average size of a loan in 2008 increased by 68% from last year ($109,000 to $184,000). This indicates banks are approving somewhat larger loans to more qualified borrowers while avoiding smaller, riskier loans to new businesses, says Harry DeWolf, Oregon SBA director.

“You’ve got to be willing to take reduced earnings to survive another day,” says Trautman.                                               

JASON SHUFFLER


Have an opinion? E-mail This e-mail address is being protected from spambots. You need JavaScript enabled to view it

 

 

More Articles

Barrister bands

March 2014
Tuesday, February 25, 2014
IMG 4691BY LINDA BAKER

An intellectual property attorney by day, 48-year-old Stoll Berne attorney Tim DeJong is a singer and guitarist by night.


Read more...

Green your workplace

News
Thursday, April 03, 2014
100Green14logo200oxBY OB STAFF

Learn how to green your workplace and lower your environmental footprint at the office. Oregon Business presents a two-hour "Greening Your Workplace" seminar on May 28th, 2014 at the Nines Hotel in Portland.


Read more...

Tech makes the world go round

Contributed Blogs
Thursday, March 20, 2014
03.20.14 thumb internetBY JASON NORRIS | GUEST BLOGGER

I don’t think anyone can (or should) remember what it was like to get things done without the internet. This milestone in technology has certainly benefited brick-and-mortar companies and subsequently launched a new era of businesses.


Read more...

Speeding up science

News
Tuesday, February 25, 2014
02.25.14 Thumbnail MedwasteBY JOE ROJAS-BURKE | OB BLOGGER

The medical research enterprise wastes tens of billions of dollars a year on irrelevant studies. It’s time to fix it.


Read more...

Closing the gap: Community colleges and workforce training

News
Thursday, March 27, 2014
03.27.14 thumb collegeBY MARY SPILDE | OP-ED CONTRIBUTOR

Community college career, technical and workforce programs present an opportunity to bring business and education together as never before.


Read more...

Leader's bookshelf

Contributed Blogs
Friday, March 14, 2014
02.06.14 BooksBY TOM COX | OB BLOGGER

Five books that will make you a better leader.


Read more...

Rapid ascent

March 2014
Tuesday, February 25, 2014
IMG 4255-2BY AMY MILSHTEIN

Kelly Dachtler, president of The Clymb, redefines outdoor retail.


Read more...
Oregon Business magazinetitle-sponsored-links-02
SPONSORED LINKS