From Wall Street to Main Street - Page 2 of 2

From Wall Street to Main Street


“Because of the uncertainty banks and large financial institutions want to keep as much cash on the sidelines,” Isakson says, putting a greater choke hold on loans. “Consequently you will have a much higher cost of borrowing.”

Isakson says small business owners can safeguard their company by paring down on expenses and maximizing the company’s most profitable components. “If your company is cash flow positive today you need to stay cash flow positive,” he says. “Now is a good time to be running your organization as trim as possible.” Owners should also consider paying down debt if the cash is available and lowering loan obligations.

The economic environment will also spur competition amongst firms as loans will be scarce. “There’s going to be a smaller margin for mistake. The competitive business environment is going to be even keener,” says Trancredi since accessing capital to recover from business blunders will be harder.

If a company already has a line of credit companies may consider an advance on that line of credit to put in a “rainy day fund.” But if credit-starved businesses need a loan they must shape up. “Show that you are a disciplines business that is safe to lend to. Credit standards are going to be higher.” He also suggested looking to emergency or government sources of funding for businesses in distress.

Finally, Trancredi and Isakson both suggest finding a lawyer, financial advisor or accountant as a resource to help make decisions in this uncertain time. People might want to “look to the information and knowledge that an advisors can often provide.”