The Agenda
How small-business issues are shaping politics and policy.
One of the most important questions for small businesses hovering through all of the tumult of the last three years is whether they’ve been able to get the credit they need. The question has been hotly debated — even becoming a partisan issue last year, when Congress wrestled with the small-business lending fund that ultimately became law in the small-business jobs act. Banks tell anyone who will listen that they are eager to lend to any creditworthy business they can find. Republicans tend to put it slightly differently: small businesses that deserve credit can get it, but many are too cautious to make investments right now. Many Democrats and some small-business advocates say a good loan is hard to find.
Last Thursday, when we asked small-business owners around the country how they were faring in this new period of uncertainty, one of the things we wanted to know was whether they needed credit, and if so, whether it was available to them. And while our informal survey was small and hardly scientific, it will not reassure those who think making credit available is the chief solution to small-business woes. None of the businesses we asked told us they were having trouble getting a loan.
Several were making new investments. Sahadi’s, the Middle Eastern food emporium in Brooklyn, hopes to expand its store to vacant space nearby. But the Sahadi family, which employs about 45 people, isn’t worried about not getting the loan it needs to undertake construction. “Our relationship with our financial institution is still very good,” said Bob Sahadi. “I mean we’ve had no reason to give them grief, and they have no reason to give us grief — we’ve both been good to each other.”
In Toledo, Ohio, Mancy’s Restaurant Group is adding a catering business to the four restaurants it already operates. But rather than borrow a million or two to buy a building and dedicate it to the new business, the Mancy family opted for a more modest course. “At our central office we have a commissary where we bake bread and have a butcher shop for our restaurants, and we’re in the process and we have converted part of this facility to also prepare catered food,” Gus Mancy said. The family is relying on “existing community assets” to host the events they cater. “At the big art museum in town we just found out Friday we’re the preferred caterer, and the only caterer named right now,” Mr. Mancy added.
Like Mr. Mancy, Scott Tate, of Tate Technology, a contract electronics manufacturer that employs 35 people in Spokane, Wash., was not eager to take on more debt. “We’re always looking at updating our equipment,” he said. “Obviously, to do that we would pay cash. We’re not going to go out and borrow money to do it. But, he added, he was not in any rush to make the investment, given the current climate. “If you’re trying to sell me a piece of capital equipment four years ago, I’d probably be a lot more interested,” he sad. “Now I’m not too sure I want to go spend any money.”
Here’s one other thing Tate Technology and Mancy’s Restaurant Group have in common, besides thriftiness: both are succeeding in part because competitors have failed. Mancy’s, Mr. Mancy said, was filling a void left when other Toledo caterers closed their doors. And Mr. Tate said that his business has grown over the last three years because of a more aggressive sales strategy but also because several competitors shuttered. “We lost three contract electronic manufacturers in the Spokane area in the last three years,” he said. “There used to be six, now there’s three. Back before the dot-com crash in the late Nineties there were nine or 10 of us. The customers that they were servicing obviously have probably gone down, but they’re still around. So that lower volume has to go somewhere else.”
They weren’t alone. Dan Pratt, owner of Pratt’s Pets and Feed in suburban Phoenix, said that this year he’s seen his best sales of the past decade — buoyed in part by less competition. “There were two stores very close to us that went out of business right away when things started getting pretty bad,” he said. “So we recouped those customers as best we could because they were in our proximity.”
They say that what doesn’t kill you makes you stronger. In the case of at least some of the small businesses that survived the last recession, that seems to be true.
How about your business? Have you benefited from the loss of competitors? Have you struggled to get credit?
Article source: http://feeds.nytimes.com/click.phdo?i=bf23940a2788ae4c1619c080f80aecf2