I heard an inspirational story last week from a member of Chief Executive Boards International. Despite ongoing difficulty in securing additional financing from commercial banks, he came up with a seemingly unlikely source of credit -- another business owner.
This member is a dealer in a capital equipment sector that's been hammered by the recession. He's seen his revenue fall off more than 50% as demand simply disappeared. He's had to close locations, move to a lower-rent facility, reduce staff and cut his own compensation to the bone to survive. Thankfully, he was paying attention early in the downturn and got a credit line in place that's enabled him to make payroll and keep current (although extended) with vendors. Thankfully, he hasn't suffered any major bad debts due to customer bankruptcies. Right now, despite being in violation of most of his loan covenants, he's current with his bank, which is preoccupied with bigger fish, and letting the line ride.
And there's some light appearing at the end of the tunnel. Demand is picking up, proposals are up, and orders are slowly on the rise. He believes he's going to make it. But what he told me last week was an inspiration. He said he got a call from one of his fellow CEBI members who had been following his situation through their regular local meetings. That member offered him credit if he needed it. Just out of the blue, another business owner whose business hasn't been so gravely affected by the recession said, "I know you're in a bind, I know you know what you're doing, and I know I can trust you." "If you find you need a hand with some additional credit, just let me know. I like to help other people when I can." That's taking our mission of business owners helping and advising each other to another level.
Actually, I believe this might be a forerunner of something we'll see a lot more of in the future -- peer lending among business owners. People who know and trust each other are infinitely better positioned to assess credit risk than traditional sources of commercial lending -- namely banks. And they're willing to help each other on a voluntary basis, without even being asked!
This story pretty much made my day, and I hope it does yours, as well.
Please click "Comment" below if you have a peer lending story to share with others.
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Terry WeaverCEO
Chief Executive Boards International
http://www.chiefexecutiveboards.com/
TerryWeaver@ChiefExecutiveBoards.com
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