Small companies are desperate for growth capital, but banks and investors remain cautious.

 

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The banks reported that they declined 72 percent of cash flow-based loans, 90 percent of real estate-based loans, and 46.7 percent of collateral-based loans. The quality of cash flow and earnings were cited as the top two reasons that loans were declined, followed by weakening industries and current debt loads.

Here are some of the key questions that were asked in the interview.

See the full article for some great insights.

  • You surveyed 559 private companies, nearly half of which reported $3 million or less in annual revenue. What are their top concerns?
  •  Your survey shows that banks are more risk-averse than they used to be and they’re relying more on collateral and personal guarantees.
  •  Many bankers say they aren’t lending, at least in part, because demand for loans is down. But your survey seems to contradict that assertion.
  •  What about loan approval rates?
  •  But your survey shows that the creditworthiness of borrowers has been going up, despite the economy.
  •  You also polled venture capital firms and angel investors, who are often a source of early investment for entrepreneurs. What did you find?
  • What does that kind of cautionary attitude mean for the economy at large?

Karen E. Klein is a Los Angeles-based writer who covers entrepreneurship and small-business issues.