Promising News From Washington?

Whatever your political beliefs, yesterday's comments from the White House were encouraging. In words (if not yet in actions), President Obama seems clearly aware of the vital impact small businesses will have on our recovery. I urge you to read those remarks in their entirety and look for evidence that these promises are being kept in a way that positively impacts you.

There was one thing missing, though. If the administration really wants to free up capital for small business, they must immediately change the behavior of front-line regulators. Any banker will tell you that clearly knowing what loans will and won't pass muster during the next regulatory exam has a HUGE impact on the bank's ability to comfortably extend credit.

The Obama administration must help regulators and banks clearly (and perhaps more broadly) define "good loans" in this economy. Bankers must feel comfortable renewing or extending lines and loans to businesses that are struggling - temporarily - because of economic factors outside their control. Of course those borrowers must be able to demonstrate that they're committed to fully repaying those obligations AND have made the tough decisions necessary to survive the downturn and thrive once the recovery begins.

If regulators continue evaluating the quality of a bank's loan portfolio using the same rules and ratios as they did prior to the recession, real small businesses won't be able to access capital until long after they're through the worst and well along the road to recovery (as evidenced by comfortable margins and a healthy balance sheet). For some business owners that need acccess to their existing lines or new loans to help them weather this storm, that will be too late.

Mark Twain once said, "A banker is a fellow who lends you his umbrella when the sun is shining, but wants it back the minute it begins to rain." We can't afford to wait until this storm clears to give umbrellas back to our best small business owners. So consider the steps announced yesterday a good first step...and hope for more to come.

-Paton

Traction Review in St. Paul Pioneer Press

Matt Meents, CEO of the notable Minneapolis web services firm Reside (and a client), was kind enough to write this glowing review of Gino Wickman's book Traction: Get a Grip on Your Business. Check it out at the St. Paul Pioneer Press.



-Paton