Samira Rajan is being realistic about the possible shift in small business activity likely to occur when the economy returns to a robust and healthy state.
As CEO of the $9 million Brooklyn Cooperative Federal Credit Union, she's seen a steady rise in queries from firms turned down by big banks for loans and lines of credit increases. The CU recently closed on a $50,000 loan for a strong-performing nonprofit group caught in the unexpected grip of not being able to make payroll. Other larger businesses have sought out the cooperative for loans that are just not doable because of the industry's lending caps.
"It's annoying because we've had people [come in], and they're impressed with what we can do in providing comprehensive services to small businesses, but the fact that you're capped out on loans, it's been an obstacle," Rajan said. "We probably won't be able to keep them around as members for the long term because of the cap."
Ongoing problems accessing credit and liquidity sources were among the top obstacles small businesses in Brooklyn named as hampering their growth, according to a new survey of member issues from the Brooklyn Chamber of Commerce. Also topping the list of impediments were the increased cost of providing health insurance, fuel or energy costs, cost of general liability insurance, finding and hiring reliable, qualified workers, and traffic and transportation problems.
"This year's survey results show a mix of conservative optimism and gritty resiliency that spells Brooklyn," said Brooklyn Chamber President/CEO Carl Hum. "Our business community is ready to contribute to getting the economy back on track provided credit is available and employers are rewarded for expanding their workforce."
As CU industry trade groups keep up the pressure in Washington to expand lending powers to, at the very least, help small businesses be the conduits to get the nation's economy moving on a more sustainable path, their efforts are being thwarted by bank lobbyists and skeptical legislators.
Rajan said since Brooklyn Cooperative started offering business services in 2004, most of its relationships came from mom and pop and sole proprietors such as hair salons, hot dog vendors and home office setups. Traditionally, they've had issues with getting access to credit and loans because of their financials and lack of track records. The nation's financial slump has changed that dynamic.
"We've had interest from really stunning businesses, who've been in business for 15 years, have been with their banks since they first started, but then after the financial crisis, they're turned down," Rajan said. "No lines of credit, nothing."
Meanwhile, 48% of respondents to the Chamber of Commerce survey said they believe the Brooklyn economy will be better in 2010 than it was in 2009, which was a 10% increase of those who held on to optimism in the previous survey. Job creation and retention is undoubtedly a cornerstone of economic recovery. Brooklyn chamber members said of all the federal government's considerations, the top three ways to help them generate new jobs are wage subsidies to offset the cost of hiring for the next six to 12 months, easier access to credit and loans and tax credits for hiring.
Rajan has also noticed that small businesses are cobbling as many financial resources they can to make things like payroll. The SBA's waiver of certain loan fees and speedier processing has helped many, as well as a city program called Cap Access, which helps with collateral, she pointed out.
"We're not saving people from the brink, but we want to help them become viable organizations," Rajan said. But she knows when the economy comes back, there could be fallout. "Some of the businesses that want to move all of their accounts to the credit union can't because there's no way we can make a substitute for the lines of credit they're used to having."