Main Street Hit by Credit Freeze

 

If all goes according to plan, credit markets should soon begin to unfreeze, and small businesses like Vanessa Fine Jewelry should have an easier time getting loans as the financial rescue package is implemented.

 

Vanessa Baugh, owner of Vanessa Fine Jewelry in Lakewood Ranch, Florida, is one of millions of business owners hurt by the credit crunch. Struggling with slower than usual summer sales and the skyrocketing costs of goods, Baugh turned to her local bank to buy Christmas inventory. She was shocked and dismayed when her bank said "No." Says Baugh, "I have had my line of credit reduced to the point that I have no cash influx for my business. For the first time in my 10 years in business, I am wondering if we will have to close our doors or file for bankruptcy."

 

Under the rescue plan, the Treasury Department is authorized to spend up to $700 billion for the purchase of equity stakes in banks or their illiquid assets at discount rates. This infusion of capital is designed to get financial institutions to once again offer loans to consumers and business owners like Baugh, helping spark an economy that appears to have fallen into a recession.

 

Stephen Horblitt, director of external relations for Creative Associates International, Inc., in Washington, D.C., is also concerned about the credit market for his small business. In the days leading up to Congress' approval of the rescue package, Horblitt said, "A failure to address the crisis in the credit markets by Congress will represent a failure of responsible governance and threaten the economic and social well-being of Main Street."

 

According to Chamber President and CEO Tom Donohue, "Americans have every right to be mad at businesspeople that drove firms into the ground and walked away with millions, the lenders who gave mortgages to people who couldn't afford them, and the people who took mortgages they knew they couldn't afford. Before we address those issues, however, we need to get our economy moving again."

 

The Chamber mobilized the business community in support of the rescue package, generating tens of thousands of calls, letters, and e-mails from business owners to Capitol Hill. Chamber staff made a number of appearances on national television news outlets and were quoted in national newspapers making the case for the legislation.