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Caution taken in credit crunch
By T.L. Hamilton
Few signs of the credit crunch are apparent in Montgomery County small businesses.
Aside from flagging home sales and a subtle downturn in consumer spending, the effects of the financial meltdown on Wall Street may take some time to creep into the local credit market.
The county’s robust job market, the tendency of its businesses to bank locally and its close proximity to Houston, a city with a rosy glow of health from the energy industry, have blocked most effects of the tightening credit market.
The unemployment rate in Montgomery County during the month of September was 4.7, up from September 2007’s 4.0 rate, according to the Texas Workforce Commission.
Nationally, the job market has been less stable. The U.S. unemployment rate was at 6.0 during September, a sharp increase from 4.5 in September 2007.
“There’s job growth here,” said Michael Richmond, vice chairman of Woodforest National Bank, based in The Woodlands. “When you have job growth, you have a healthier economy. If you’re in an area that’s heavily into the manufacturing industry where there are enormous job losses, it’s more challenging.”
Many small businesses operate on credit. They’ll establish lines of credit with banks for payroll, buying equipment and paying bills or taxes.
That system gets interrupted when banks remove those lines of credit and businesses have to fund all of that on their own.
Richmond and Sam Baker, president and chief executive officer of First Bank of Conroe, both said when it comes to extending lines of credit to local businesses, it’s still business as usual for their banks.
“We have the money to lend and we’re going by the same credit standards we’ve always used,” Baker said. “On a national basis, evidently that practice has slowed down. I haven’t seen that happen around this area, and I know that banks like ours and Woodforest are still taking opportunities to (extend credit).”
Local businesses haven’t met obstacles when seeking credit.
Jim Blackwelder, owner of Premiere Cleaners at North Loop 336 West and Texas 105 West in Conroe, said he will sometimes ask for a bank loan to cover a new piece of equipment.
The banking crisis has presented few problems for Blackwelder. When he started hearing news reports on unraveling banks like Bear Stearns and Lehman Brothers, he met with his bankers and asked if they were solvent.
Satisfied with their answers, he said nothing has changed. He recently moved to a new location, and was able to cover those costs easily.
“I’ve been lucky,” he said.
Blackwelder’s business still is not entirely exempt from the credit crunch, however. He sometimes uses a credit card to make business purchases.
“I had a card with a really low rate and was paying it off,” he said. “Suddenly, I get this notice that they were going to increase it to a 27.9 APR.”
Blackwelder has cut back his credit card use since then.
“Now if only I could get more customers in the door,” he said. “They’re bringing in fewer and fewer items; a lot of dry cleaners are starting to feel that.”
Revenue in the door hasn’t been a problem for Stephanie Emig, manager of Pink Cowboys, a specialty children’s boutique in The Woodlands.
“Customers have been pretty steady,” she said. “Our clientele are mostly in the upper class, and their spending doesn’t seem as affected.”
Emig said the store rarely uses bank loans to cover costs, but it does buy merchandise on credit cards, charging up to $20,000 per month.
But their interest rates have stayed steady.
“We haven’t had any issues that I’ve noticed,” she said.
Having a previous relationship with your banker can make a world of difference when it comes to getting credit, said Charles Wilkinson III, owner of Fiesta Motors in Conroe.
While some bankers have tightened up on their conditions, the money is still available, he said.
As a dealer of used vehicles costing about $5,000 each, Wilkinson said revenue is down slightly for him, but it hasn’t been as steep a decline as the bigger dealerships have seen in recent months.
First, customers avoided buying new vehicles while gas prices were high. Now that gas prices have lowered, the credit market has tightened, leaving most would-be customers without financing.
“America has adopted an unsustainable lifestyle of consumption and debt and all that unhealthy stuff your grandparents said was bad for you,” he said. “Now we’re seeing why they said that.”
The county is sheltered and has not had the degree of issues as the rest of the United States, said Gary Milleson, owner of American Finasco, a credit repair agency based in Conroe that operates nationwide, with about 160 current clients.
“It won’t be totally shielded from these more recent problems with the credit crisis and stock market. But as of now, I don’t feel it or hear it,” he said.
Even his company has not had issues when seeking lines of credit, he said.
While loans are still fairly easy to get here, some companies are exercising caution and attempting to increase their credit scores in case of further tightening.
Leigh Barr, owner of A+ Credit Repair and Counseling in Conroe, said she’s getting more and more business clients recently.
“People want to grow their business’ credit so the loans don’t have to be insured by the owner,” she said.
Both U.S. Rep. Kevin Brady, R-The Woodlands, and Democrat Kent Hargett, who is running against Brady in Tuesday’s election, believe the federal government can work to shield this district from any profound effects of the economy’s downturn and the credit crunch.
“My highest priority is getting the credit market for the credit worthy flowing again,” Brady said. “And we’re starting to see signs of it. It’s still grinding slow, but at least the wheels are grinding. At the national level, credit is starting to improve slowly.”
Hargett said the approach should be more “surgical” than the actions of Congress while Brady has been in office.
“Instead of trying to generally save Wall Street, we need to save some banks and let other banks perish,” he said. “Washington is being dragged over to Wall Street, and that’s not the only way or the best way to do it.”
Libertarian challenger, Brian Stevens, who also is running against Brady, did not return calls for this story.
Aside from flagging home sales and a subtle downturn in consumer spending, the effects of the financial meltdown on Wall Street may take some time to creep into the local credit market.
The county’s robust job market, the tendency of its businesses to bank locally and its close proximity to Houston, a city with a rosy glow of health from the energy industry, have blocked most effects of the tightening credit market.
The unemployment rate in Montgomery County during the month of September was 4.7, up from September 2007’s 4.0 rate, according to the Texas Workforce Commission.
Nationally, the job market has been less stable. The U.S. unemployment rate was at 6.0 during September, a sharp increase from 4.5 in September 2007.
“There’s job growth here,” said Michael Richmond, vice chairman of Woodforest National Bank, based in The Woodlands. “When you have job growth, you have a healthier economy. If you’re in an area that’s heavily into the manufacturing industry where there are enormous job losses, it’s more challenging.”
Many small businesses operate on credit. They’ll establish lines of credit with banks for payroll, buying equipment and paying bills or taxes.
That system gets interrupted when banks remove those lines of credit and businesses have to fund all of that on their own.
Richmond and Sam Baker, president and chief executive officer of First Bank of Conroe, both said when it comes to extending lines of credit to local businesses, it’s still business as usual for their banks.
“We have the money to lend and we’re going by the same credit standards we’ve always used,” Baker said. “On a national basis, evidently that practice has slowed down. I haven’t seen that happen around this area, and I know that banks like ours and Woodforest are still taking opportunities to (extend credit).”
Local businesses haven’t met obstacles when seeking credit.
Jim Blackwelder, owner of Premiere Cleaners at North Loop 336 West and Texas 105 West in Conroe, said he will sometimes ask for a bank loan to cover a new piece of equipment.
The banking crisis has presented few problems for Blackwelder. When he started hearing news reports on unraveling banks like Bear Stearns and Lehman Brothers, he met with his bankers and asked if they were solvent.
Satisfied with their answers, he said nothing has changed. He recently moved to a new location, and was able to cover those costs easily.
“I’ve been lucky,” he said.
Blackwelder’s business still is not entirely exempt from the credit crunch, however. He sometimes uses a credit card to make business purchases.
“I had a card with a really low rate and was paying it off,” he said. “Suddenly, I get this notice that they were going to increase it to a 27.9 APR.”
Blackwelder has cut back his credit card use since then.
“Now if only I could get more customers in the door,” he said. “They’re bringing in fewer and fewer items; a lot of dry cleaners are starting to feel that.”
Revenue in the door hasn’t been a problem for Stephanie Emig, manager of Pink Cowboys, a specialty children’s boutique in The Woodlands.
“Customers have been pretty steady,” she said. “Our clientele are mostly in the upper class, and their spending doesn’t seem as affected.”
Emig said the store rarely uses bank loans to cover costs, but it does buy merchandise on credit cards, charging up to $20,000 per month.
But their interest rates have stayed steady.
“We haven’t had any issues that I’ve noticed,” she said.
Having a previous relationship with your banker can make a world of difference when it comes to getting credit, said Charles Wilkinson III, owner of Fiesta Motors in Conroe.
While some bankers have tightened up on their conditions, the money is still available, he said.
As a dealer of used vehicles costing about $5,000 each, Wilkinson said revenue is down slightly for him, but it hasn’t been as steep a decline as the bigger dealerships have seen in recent months.
First, customers avoided buying new vehicles while gas prices were high. Now that gas prices have lowered, the credit market has tightened, leaving most would-be customers without financing.
“America has adopted an unsustainable lifestyle of consumption and debt and all that unhealthy stuff your grandparents said was bad for you,” he said. “Now we’re seeing why they said that.”
The county is sheltered and has not had the degree of issues as the rest of the United States, said Gary Milleson, owner of American Finasco, a credit repair agency based in Conroe that operates nationwide, with about 160 current clients.
“It won’t be totally shielded from these more recent problems with the credit crisis and stock market. But as of now, I don’t feel it or hear it,” he said.
Even his company has not had issues when seeking lines of credit, he said.
While loans are still fairly easy to get here, some companies are exercising caution and attempting to increase their credit scores in case of further tightening.
Leigh Barr, owner of A+ Credit Repair and Counseling in Conroe, said she’s getting more and more business clients recently.
“People want to grow their business’ credit so the loans don’t have to be insured by the owner,” she said.
Both U.S. Rep. Kevin Brady, R-The Woodlands, and Democrat Kent Hargett, who is running against Brady in Tuesday’s election, believe the federal government can work to shield this district from any profound effects of the economy’s downturn and the credit crunch.
“My highest priority is getting the credit market for the credit worthy flowing again,” Brady said. “And we’re starting to see signs of it. It’s still grinding slow, but at least the wheels are grinding. At the national level, credit is starting to improve slowly.”
Hargett said the approach should be more “surgical” than the actions of Congress while Brady has been in office.
“Instead of trying to generally save Wall Street, we need to save some banks and let other banks perish,” he said. “Washington is being dragged over to Wall Street, and that’s not the only way or the best way to do it.”
Libertarian challenger, Brian Stevens, who also is running against Brady, did not return calls for this story.
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