Small Business Owner Gets Bank Loan Yanked

Ryan Fochler, Owner of Dog Paws ‘n Cat Claws says he felt like he had been socked in the stomach when his bank reduced his credit from $56,000 to $1,000. The pet care industry is growing and Fochler was growing his business by expanding into a retail store in addition to his already existing grooming, walking, boarding and pet training business when it was all put on hold as a result of the credit crunch. After losing the capital to expand from his bank he approached, what he felt like was all of the banks, big and small, in his area for a loan. Although lenders sympathized with his situation they said that due to the current economic circumstances he was not eligible for a loan. 

Since then Fochler has grown his business from seven employees to 20 despite the credit crunch. How? He tapped into the Small Business Administration’s microloan program by contacting an SBA approved intermediary in his area. 

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Small Biz Turn to Microloans

 In the meantime, banks continue to tighten lending standards and terms for businesses, according to a newly released survey of Senior Loan Officers from the Federal Reserve. As a result of this more and more small business owners are turning to microloan programs.   Today the microloan program could get a boost from lawmakers. A bill recently passed by the House that is now being reviewed in the Senate Small Business committee- would increase the maximum amounts and terms for microloans. However the senate has a bill of their own that includes an increase of the maximum lending amount for microloans from $35,000 to $50,000.