We’re in an amazing time right now. Some have said that this is once in a lifetime economic event. It’s scary when Fortune 500 companies and governments (like the State of CA) are struggling to get financing and having major consequences as a result. What does that mean for small business owners who even in good times are ignored?
I recommend that you do diligent vetting of your bank(s) to make sure they won’t default on their promises to you. With my companies I directed a mini run on the bank (not for deposits) but for access to the lines of credit. I was talking to a VP at WaMu and she agreed that this was a good idea. Lately some banks have been required by the FDIC to take actions to limit access to the unused limits on small business credit lines.
Does this mean that you should change your bank? Maybe not. The addition of 150% more FDIC insurance will help reduce risk. However, if you have a healthy payroll it wouldn’t be a bad idea to “spread it around”.
In the immediate future it’s going to be the small business owners who are hurt the most. Since we’re the ones who create the most jobs it could cause a protracted downturn.
Now that access to cheap capital may be over (at least temporarily) I predict that you’ll see more conservative management practices and an additional willingness to obtain equity investments in the business. After all, you’re business might just be the safest business in town. it’s a known risk that can be controlled instead of unknown risks popping up and causing havoc 24/7.
Hopefully we can all survive and be stronger at the end of this major event!
