The National Federation of Independent Business (NFIB) joins Warren Buffet in the opinion that there exists no credit crunch for small business per today's Reuter's release."There is no credit crunch on Main Street for small businesses. Period," said William Dunkelberg, chief economist of the NFIB.
Dunkelberg's opinion is based upon the recently released survey of NFIB released earlier this week which predicts a recession.
The Reuter's release had two items that caught my eye:
- Many small businesses are seen heading for trouble because they used home equity loans to fund their businesses during the housing boom. In July 2006, I warned small businesses that home equity was in the process of declining and continued reliance on this would make financing their business more difficult.
- One borrower noted that his bank wanted his home, in which he has built up a lot of equity, as collateral rather than the assets of the business. He refused not wanting to mix his business assets and personal assets.
While most small business owners will still have to provide a personal guarantee, there are still plenty of lenders (including banks) that will look solely to the assets of a business as the collateral. Acceptable collateral includes purchase orders, accounts receivable, inventory, equipment and real estate.
On the other hand, if you don't have any assets in your business, be prepared to give a lien on your home if you've got one.
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Tags : credit crunch , business loans , Warren Buffet , NFIB
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