Sep 26, 2008 6:10 pm US/Central
Small Businesses Feeling Squeeze
Bailout Could Help Save Entrepreneurs
CHICAGO (CBS) ―
-
-
Arjester Reed, manager of a neighborhood restaurant, said business has slowed down dramatically since the economic slide began.
CBS
Small businesses are suffering because of all the banking problems.
CBS 2's Dorothy Tucker reports the financial bailout for Wall Street could help entrepreneurs like Ronney McCarthy. For the last eight years, printing has been the crux of McCarthy's sign business. But recently, it's been his biggest loser, dropping 75 percent in the last few months.
"It's hard. It's stressful," McCarthy said. "Right now I'm down to two part-time employees. After today I'll have one part-time employee."
Down the street at Chicago's Chicken and Waffle, manager Arjester Reed is trying to hang on to his 63 employees. But he's cut all their hours in half because he's got fewer customers. The cutbacks started about two weeks ago, about the same time banks announced one failure after another.
"We went from doing very well one day to moderate the next," Reed said. "There's no disposable income. People trying to make home mortgages..."
Sandy Baruah, acting administrator of the U.S. Small Business Administration, said his agency is responsible for giving government back loans to small business, but the numbers of loans its handed out has dropped 50 percent.
"Small business is very much feeling the credit crunch," he said. "Banks have frozen their lending. It's because of mortgage securities that are kinda clogging up the system."
That's why Baruah is pushing the government's $700 billion bailout plan. He says the bailout plan means the government will buy the bank's bad loans and sell them on the open market in the future. But in the meantime it means banks will once again loan money to small businesses.
"If we don't execute, banks are going to continue to resist. That's going to hurt small business growth and that's going to hurt overall employment in our economy," Baruah said.
Reed is not sure about the bailout plan, but he hopes he can hang on long enough for business to improve.
"Right now it's really day-by-day, it's really is, and that's scary," he said.
Baruah also says the bailout would send a positive message to the country's foreign business partners. He is among those hoping Congress will pass the plan sooner than later.
(© MMIX, CBS Broadcasting Inc. All Rights Reserved.)
Jewish Celebrities
Click to enlarge
Stumble It!
Reporting
