Business

Banks, can you spare a loan?

Morgan Alexander, left, owner of Amocat Cafe, tells Sen. Patty Murray on Tuesday about his struggle to get a loan to expand his Tacoma business.
Morgan Alexander, left, owner of Amocat Cafe, tells Sen. Patty Murray on Tuesday about his struggle to get a loan to expand his Tacoma business. The Olympian

Politics aside, small-business owners are in a credit desert.

“I’m just in a holding pattern until I can get (money to make the improvements) myself.”

“In one month, with no notice, we went from (a) $35,000 (line of credit) to $1,000.”

“I supported myself, three kids and seven employees. Now I can’t get $50 from a bank.”

Those were some of the comments from seven small-business owners Tuesday during a meeting with Sen. Patty Murray, D.-Wash. The event, arranged by Murray’s staff at Amocat Cafe on St. Helens Avenue in Tacoma, was intended to highlight legislation currently awaiting a vote in the Senate that would create a $30 billion fund intended, among other things, to encourage community banks to lend to small businesses. It passed the House in June.

Under the bill, the U.S. Treasury Department would buy preferred stock in banks with assets of less than $10 billion. As the banks’ small-business loans increased, they’d pay a lower interest rate for the money.

Republicans, including Murray’s opponent Dino Rossi, have said the fund is nothing more than another bank bailout.

Rossi’s campaign held a small-business roundtable in Tacoma in July. Campaign spokeswoman Jennifer Morris said Tuesday that those business owners were concerned about the expiration of tax cuts and the cost of employee health insurance.

On Tuesday, the discussion focused on the lack of credit and lending. Here’s what some of the small-business owners had to say.

Morgan Alexander, owner of Amocat Cafe

When he opened Amocat Cafe recently, the maximum line of credit the bank would give him was $5,000.

He wants to build a small kitchen so he can prepare food and baked goods, but he needs to improve the electrical and plumbing systems. He said that if he could add the kitchen, he would hire at least two more people.

“I’m just in a holding pattern until I can get capital myself,” he said.

Melanie Manista-Rushforth, co-owner of Rushforth Wheels

She and her husband own a custom wheels business they started three years ago. They have sold products in 17 countries through their online store, and they work out of their home. They started with a $35,000 line of credit, which they used on various revolving expenses including a $1,200-$1,500 weekly shipping bill.

“In one month, with no notice, we went from $35,000 to $1,000,” she said. Vendors started having their payments denied, and now the business operates solely with cash.

Manista-Rushforth said she and her husband paid off the line of credit each month. She believes that’s why the bank cut it back – because it wasn’t making money in interest.

Lynette Young, owner of 26 Bark Avenue Gifts, Pet Salon and Doggie Day care

She owns three businesses: a pet gift store, a salon and a daycare. She has been a small-business owner for 17 years, working with the same bank. She wants to open a fourth business, a pet hotel, which she estimates will create five full-time jobs. She can’t get a business loan.

“They said if you had your husband sign the paperwork, we would reconsider. Well, I no longer have a husband so everything is on me,” she said. They also offered to make her a personal loan or use her house as collateral, something she’s unwilling to do.

Shannon Thompson, owner of Envy

She owns a boutique in the Proctor District. She also once owned a boutique in Gig Harbor, but the 2008 snowstorm and the recession caused it to close. Before the storm, she had two stores and employed seven people. Now she’s down to one store and one employee. She says banks consider her to be a credit risk.

“I supported myself, three kids and seven employees. Now I can’t get $50 from a bank,” she said.

She runs her business on personal credit cards and travels to Los Angeles on day trips with empty suitcases to restock her inventory. She can’t get a business loan.

“It is choking me. Everything is choking me,” she said.

Gordon Naccarato and Joe Hardwick, owners of Pacific Grill Restaurant

They have 70 employees and a $50,000 bi-monthly payroll. The restaurant has been open for five years, and Naccarato would like to buy a $28,000 oven that would help his recently expanded catering operation. Plus, he would like to expand the restaurant’s wholesale food businesses.

Naccarato said he hasn’t bothered to approach a bank, especially in this lending environment.

“Restaurants in general – banks consider us like a pariah because so many fail,” he said.

Hardwick said business was down 8 percent in 2008 and 13 percent in 2009, but it’s up so far in 2010. They’re still worried.

“Bad economic news makes people hold on to their wallets,” Naccarato said.

Kathleen Cooper: 253-597-8546 kathleen.cooper@thenewstribune.com  

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