My husband owns a small RV business, started by his father more than 50 years ago. A few years ago, things were going great -- two locations, 50-plus employees, demographic trends on his side (a growing pool of Boomers retiring to RVing, for example). He still worked six to seven days a week, but life was good.
Then the gas prices began to creep up. And up and up. That slowed things some. But it was the credit freeze that followed that just about stopped business. No money for people to borrow to buy units; no money for my husband to use for daily business, from buying inventory to making payroll. Manufacturers, dealers and others associated with the industry went belly-up.
Now it's our turn -- even though we use a bank that received at least $3.4 BILLION in TARP bail-out money. Money that was supposed to go to businesses hurt by the credit crunch.
People who don't own a small business might not realize what's involved, money-wise, for the owners. To buy property and inventory, small-business people like us are made to sign personal notes, guaranteeing multi-million-dollar loans with everything we own as collateral. (Note to anyone starting or expanding a small business: refuse to sign the personal notes! I wish we had, but we felt forced to do this by the bank. This just seemed to be the way business was done, or at least the way it's handled at our small-business level.)
When a catastrophe happens -- as we've experienced over the past 18 months -- the bank can call the loans, of course; but they can also call these notes. That means our home, our cars, the cash in our bank account, our kids' cars, our savings -- all that we've worked for for so many years -- can be seized by the bank.
When a small business fails, there are no unemployment checks for the business-owner. When a small business shuts down, there is no health insurance for the business owner or his former employees -- Cobra does not apply.
The bank offered to work with us to avoid Chapter 11 bankruptcy, which saves the bank money (as in millions of dollars of money). My husband thought he had a deal struck, all but signed -- and then, yesterday, with no warning, in a stack of Fed-Ex'd envelopes, the bank called the loans. And the notes.
I can't help but wonder if bank officials looked at what they expect to get from TARP 2 and/or the current stimulus package, and figured they no longer had to worry about "peanuts" loans like ours (a mere $6 million). After all, the taxpayers will cover any losses. Might as well just seize our inventory and let their liquidator have at it & earn his take.
We feel betrayed by the bank. We feel let down by government that is taking too damn long to come to our rescue. We feel shattered by the loss of the business built for more than half a century. We feel horrible for the 30 employees who will lose their jobs; many have worked there for 10, 15, 20 years.
The ironic thing: business actually is starting to pick up. My husband has had the highest customer traffic in more than a year recently. People seem to be shopping -- perhaps just waiting until they can get credit or get some confidence that they won't lose their jobs.
Another point: my husband has never missed a loan payment, never missed a mortgage payment, never missed a payment of any type. He is only in default due to excess inventory, which people aren't buying due to the current economic crisis, including credit crunch.
Given some credit from the bank, my husband's business probably could recover, and go on once this crisis is over to continue to be a stable small business for many years to come.
But will the bank give my husband a chance?
It doesn't look that way.
Will legislators stop pontificating and playing their political games, with eyes on the 2010 and 2012 prizes, and get us some relief?
I'm not holding my breath.
I know others are worse off than we are. I don't want to whine or complain.
But if anybody has any suggestions for anything we can do -- and anything other business-owners like us can do -- please let us know.
We need help.