Chamber looking to help small businesses get started

By Owen Boss

GARDNER — The recent sale of several major national banks has created an economic climate that has made obtaining small business loans more difficult for business owners across the region, a situation officials at the Greater Gardner Chamber of Commerce are trying to remedy. According to chamber President and CEO Mike Ellis, efforts are being made to start a program to help small business owners acquire the funding they need to open their stores. “The market is so tight and gaining access to credit is so tight right now, but it is not impossible,” said Mr. Ellis. “What we want to do is open up the lines of communication between our lenders and those that need capital to see how we can infuse some money into our small businesses.” The program, which Mr. Ellis said was still in its preliminary stages, would outline some shortcuts business owners can take to acquire the additional funding. “This program would be about how small businesses can access capital because it is absolutely essential, but it is not impossible,” Mr. Ellis said. “We are very aware of the problem and know some of the tricks that small businesses can use to get around these roadblocks.” In order for the economy to get back on its feet, offering loans and lines of credit to fledgling businesses has to be made a top priority, said Mr. Ellis. “The economy is not going to bounce back without the smaller businesses,” said Mr. Ellis. “We look at the AIGs of the world and people are throwing huge amounts of money into these larger businesses which act as a way of stabilizing the economy. However, it is the small businesses that represent the ingenuity of America and are the ones that provide growth in the American economic engine.” In the wake of a massive Wall Street bailout, Suffolk University Law School professor Jeff Lipshaw said the main reason banks are becoming increasingly apprehensive about lending to residents and businesses is because they are unsure about how to quantify their risk. “When banks aren’t paying back other banks for money they’ve shared between them, it becomes a huge problem,” said Mr. Lipshaw. “What happens here is that there is a lot of fear. The interest rate that banks pay to each other for money lent between banks has been set at about 2 or 3 percent. Amidst the turmoil last week, that rate shot up to almost 6 percent.” Although he said he expects the upheaval on Wall Street to calm in the coming months, Mr. Lipshaw said he also expects these rates to remain high until banks have more faith that the money they lend out will be quickly repaid. “Their level of confidence is affected by the fact that they don’t know how much to charge for the risk,” said Mr. Lipshaw. “No one is really worried about Citibank not being there tomorrow; they just can’t measure the risk between today and tomorrow, so they are deciding not to lend to anyone because things are so crazy.” Mr. Ellis said the problems facing small business owners stems from several years of the government favoring the interests of larger businesses. “Quite honestly it is a little bit unnerving. If we aren’t doing something right now to help the small business economy we are looking at long-term catastrophic consequences,” said Mr. Ellis. “Almost all of the new pieces of legislation that have been enacted in the last two years in Massachusetts have really negatively affected the small business economy and so we have really done nothing to nurture this economic engine.” Business owners interested in the assistance program are encouraged to contact the Gardner chamber of commerce and speak with a small business counselor. oboss@thegardnernews.com

Appeared on Page 1 on 9/27/2008 (Vol. 206 No. 229)