Six small business owners sat down with U.S. Sen. Patty Murray in Vancouver on Thursday to share a common woe: their inability to get credit to hire new workers, maintain inventory and expand their companies.
Since the financial meltdown of late 2008, they have resorted to borrowing against their homes, borrowing on personal credit cards, tapping their retirement. Now, without ready access to capital, some are seeing the opportunity to share in the economic recovery pass them by.
“We are ready to expand,” said Tiffany Turner, owner with her husband of the 12-unit Inn at Discovery Coast in Long Beach. “We’ve grown close to 10 percent. But our bank is saying, ‘We can’t loan to your sector right now.’ They are unwilling to take the risk.”
Don Orange, owner of Hoesly ECO Auto & Tire in Vancouver, moved his shop to a new building in October 2008. But after the Bank of Clark County failed in January 2009, he lost his line of credit and struggled to make his payments. “The only way was a loan against our home,” he said.
“It appears the economy is improving,” Orange said. His business employs four workers in family-wage jobs. “We want to hire another technician and buy equipment.”
But he’s expecting to get hit with a big tax bill. Right now, he’s using a credit card — and paying a 2 percent charge on each transaction — to keep his business afloat.
He’s happy for the new health care reform bill, though, he told Murray.
It will allow him to claim a federal tax credit equal to 35 percent of the cost of his health premiums next year.
Murray, D-Wash., is running for her fourth term in the U.S. Senate. She’s making the rounds of Washington businesses this week to gather the real-life stories of small business owners who are struggling without access to credit. And she is refusing to let death threats over her support for health care reform slow her down,
“I’m fine,” she said when asked about the threats. “I’ve got every confidence in the public.”
“What worries me more than anything,” she told business owners, “is what is happening to the little shops I knew. I started to hear from everyone that access to credit is a huge issue, for businesses that want to expand and for community banks that can’t afford to loan” because too much of their money is tied up in toxic assets.
To begin freeing up cash for businesses and putting community banks on a more stable footing, Murray has introduced the Main Street Lending Restoration Act. It would direct $30 billion in unused Troubled Asset Relief Program (TARP) funds to community banks to buy their toxic assets.
Unlike other, similar bills, Murray’s proposed legislation would use the TARP funds to leverage money from private investors and deploy the combined funds to remove troubled assets from the books of community banks.
“Community banks have a major role to play in helping to create jobs and grow small businesses in their neighborhoods,” she said. “But they’ve been handcuffed by the economic downturn. Instead of opening up the lending window to local businesses, they’ve been forced to lock up the vault.”
Last week, Murray grilled U.S. Treasury Secretary Timothy Geithner on the issue at a Senate Budget Committee meeting, asking him why assistance was immediately provided to Wall Street during the financial meltdown of late 2008 and early 2009 but remains largely absent on Main Street a full year later.
She pressed him to support her Main Street Lending bill.
In Vancouver, Murray asked for help in making the case. “This is going to take legislation and hard work,” she said. “I’ve got to be able to sell this. … A lot of small businesses don’t want to tell their stories because they don’t want their customer base to know they’re struggling.”
Lonnie Chandler, owner of two Vancouver businesses, Java House and Vintage Distributing, had no such reluctance.
“We are in our 20th year at Java House and have never had a down year until this year,” he said. Business is down slightly at Java House, he said, probably because there are fewer workers in the downtown area, but he had no problem getting a line of credit for the coffee house after the Bank of Clark County folded.
His wine distribution business is a different story, he said. It’s newer, and he hasn’t been able to get a new line of credit to cover its expenses. That means he can’t always buy the wines he needs for his inventory when they become available. “I’ve had to tap my own retirement fund” to buy wine, he said.
What’s more, 12 restaurants that were regular customers of his wine business have gone under, he said.
“I’ve never seen anything like this,” Chandler said. “Banks are telling us there isn’t anything they can do.”
Betsy Henning, a partner in AHA!, a Vancouver marketing communications company, and Linda McLain and Leslie Currie, who have an accounting firm in Vancouver, resorted to taking out loans from the Small Business Administration when credit dried up.
AHA!, which employs 35, “made the very difficult decision to pull all our money out before the Bank of Clark County failed,” Henning said. “Our business in the first half of 2009 just died. We froze salaries and have given no raises.”
Now things are looking up, she said.
“We are on fire right now. We have hired five people. We have more potential than we have cash. Economic recovery is going to happen a couple of jobs at a time.”
- The Columbian