The House Committee on Small Business held a hearing on creating opportunities for small businesses in an economic recovery.
A group of entrepreneurs from manufacturing, housing, retail and agriculture testified that the current crisis is taking a toll, pushing many to the brink. They included Thomas Franke, executive vice president and chairman of Riemeier Lumber, a business that has been operating since 1925 and survived the Great Depression. However, the company now is forced to close its doors on November 6 due to inability to secure capital.
"Our banking relationship that was so strong in 2005, 2006 and 2007 as we grew and expanded the business, deteriorated during the later half of 2007 as the housing market continued to decline and credit crisis accelerated," said Franke. "Our builder customers were affected by the downturn and the credit crisis. They were unable to pay us, which caused our credit to suffer as their unpaid receivables were not considered good collateral by the bank."
There are five employees left at the firm, including three accounting staff members who will be working until the facility closes next week.
"For a business that has been in existence for over 70 years and survived the Great Depression to be closing its doors after all these years is very telling about the challenges facing entrepreneurs," said committee chair Nydia Velázquez, D-N.Y. (pictured)
In conjunction with the hearing, the committee released a report on small business economic outlook that found small businesses are hurting in all sectors. "Overall small business optimism is down," said the report. "Fewer and fewer entrepreneurs see themselves hiring workers and expanding. Many cite inflation and poor sales as the reason behind this."
The report noted that the volume of Small Business Administration loans has decreased 38 percent since last year. Fiscal year 2008 reflected the largest decline in total loans in the SBA loan program's history, with 30,000 fewer loans than last year.
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