Friday, October 17, 2008

Local Banks Still Making Loans

I attended a Sustainable Business Network of Portland luncheon this week and the speakers were Dave Williams from Shorebank Pacific and Margo McCoy from Albina Community Bank. While they both talked about the causes and ramifications of the banking crisis (Insert macroeconomic lecture here), they also made it clear that their banks and many other banks had money to loan.

What has changed is some of the lending ratios (50-70% of equity rather than 90%) and collateral valuations. Due to declining asset values, firms that at one time borrowed 80% of an asset's value may actually be upside down due to market declines.

While there are problems with the banking industry and many banks have temporarily stopped loaning to each other, banks make money by making good loans and companies seeking funds shouldn’t give up. Having a solid banking relationship is important for every business both in good times and in bad.

I’m actually filling out a bank loan application today to buy some computer equipment for my new firm. I am hoping for a response early next week. I’ll keep you posted.

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