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Small Business Owners Look For Other Financing

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Oct 1, 2008 7:05 am US/Mountain

Small Business Owners Look For Other Financing

Reporting
Shaun Boyd

WESTMINSTER, Colo. (CBS4) ―

Click to enlarge 1 of 1: John Kelley owns the Forza Coffee Shop in Westminster. Even though he is a veteran business owner with excellent credit and good backing, he's had trouble qualifying for a loan. Kelley worries the nation's credit crunch will only make matter's worst.
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Small business owners have started turning to other source for loans as the credit markets freeze up. Some are using second mortgages and credit cards to finance their businesses as banks change the terms of loans and increase interest rates.

John Kelley owns the Forza Coffee Shop in Westminster. Even though he is a veteran business owner with excellent credit and good backing, he's had trouble qualifying for a loan. Kelley worries the nation's credit crunch will only make matter's worst.

"We've actually modified our business plan and not relying on any credit from here on out," Kelley said. "If things turn really bad, it will mean we will close the doors."

Andrew Spaulding with First Community Bank in Denver specializes in small business lending. He said money is available, but lenders are more particular about to which business to give the money. Some lenders are requiring a more detailed business plan which delays loan approval in many cases.

"If it is a high end restaurant, we'd be real hard pressed to do that deal right now," Spaulding said.

Kelley said for now, cash flow is keeping his business going. But because consumers cut back on extras like coffee when the economy struggles, he wonders how long he'll be able to keep the cash flow open.

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