Big Banks Slash Small Biz Credit Lines

Posted on July 19, 2019 in Money & Finance

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 When it comes to small-business financing, there seems to be a lot of lip service and very little financial service. It’s hard not to get cynical when you hear that “small businesses are the backbone of the economy” on the one hand, yet learn that the big Wall Street banks have slashed their small-business loan portfolios on the other.

Many small businesses are facing cash flow problems, and there’s a serious question whether recent congressional proposals are equipped to really handle the situation. According to Professor Scott Shane, these programs will help only a tiny sliver of the small-business world, and largely ignore those businesses with fewer than five employees.

Anecdotally, I’m also hearing that credit institutions are reducing small-business credit lines–through no fault of the business, and even if all payments have been made on a timely basis.

With all of the gloom and doom, what are some proactive steps you can take?

  1. Run your financial statements to get clear on your financial needs. If you’re having trouble understanding them, check out the educational videos available on
  2. Screen the banking and credit institutions you deal with carefully. Some claim to have programs to help small businesses, but make sure you get the full picture. For example, according to Inc. Magazine, JP Morgan Chase recently began a program to reduce interest rates (by half a point) on credit lines for every new hire the company makes. However, if they make it difficult to get the credit line from the outset, or if the interest is exorbitantly high, you may want to work with another bank. Make sure you get the full picture. 
  3. Get your legal house in good order. It’ll help make your case when you’re seeking financing–plus it will help plug any leaks . . . so that you can avoid costly crisis situations. What are the leaks? Get your copy of my Legal Health Checklist so that you can put your company–and your finances–on the road to recovery!

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