The Fed drops interest rates to banks, which can borrow money at 2.5%. Do the banks pass this on to small businesses or consumers? Absolutely not…banks don’t want to take the risk of lending to the job creators (small businesses)…and they’re not fulfilling their traditional role of stepping in with lending.

The National Small Business Association’s recent survey shows that members are finding that “available capital” is one of the greatest risks to their firms. It also showed that 44% of these businesses had used a credit card to provide financing over the last year.

The increasing use of credit cards to keep smaller companies afloat shows the huge disconnect (dislocation) between government policy and life in the real business world.

The bottomline: Small business is left to credit card financing as a last resort, where the covering of high interest rates (19% to 24%) make it extremely difficult to operate profitably.

The smart and aware business owner is using barter at every opportunity in these challenging times–it’s the financial insurance policy.
BarterINSURANCE

This entry was posted on Wednesday, May 7th, 2008 at 7:15 am and is filed under From the Desk of Bob Meyer. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.