June 06--With the recession over, business borrowing is on the rise in the Montgomery area. But bank experts say a few common mistakes are hurting entrepreneurs on this hazardous road to recovery.
Through April, Wells Fargo reports that business loan volume in the area is up 25 percent over last year. And Montgomery-area small business loans from the bank have more than doubled in the past year.
Despite that, bank leaders said lending isn't the biggest barrier most businesses are facing. Only about 10 percent of their small business customers say access to capital is their top concern, said Sean Mabey, Wells Fargo's director of small business strategy for the Southeast.
"There's never been a time that there's been this many entrepreneurs out there," Mabey said. "They all need help.
"The existing businesses that have survived (the recession), they have no idea how to survive in a market like this because there's never been one. They're coming out with sunshine on their face and saying, 'Now what?'"
Billy Livings, business banking manager for the Montgomery area, said Wells Fargo has seen a jump in equipment financing as many gear up for brighter days.
"People have gotten lean," Livings said. "They've deferred purchases. Now they've gotten to a point where they just can't wait anymore."
Still, there are potential pitfalls ahead. And while the ups and downs of the economy can be tough to predict, the bank's leaders said businesses can plan for some of the most common dangers.
One of those is year-round cash flow. Seasonal surges and lulls may seem obvious for air conditioning or pool service providers, but the bank's leaders said the problem is much wider.
"With almost every business, there's going to be a time when costs are higher than revenue," Wells Fargo district manager Nathan Crossett said. "You have to talk about that."
Another common mistake new business owners make is handling payroll themselves instead of letting a bank or other financial services handle it for them. Mabey said ever-changing tax laws make that difficult and risky.
"If mistakes are made, the business is on the hook," Mabey said.
The bank has created a website, wellsfargoworks.com for info, with information on how to deal with those obstacles and others.
Mabey said it all comes down to looking for help and resources before problems arrive.
"People are waiting until they need it, and sometimes that's too late," he said.