Editorial:
This past week Congressman Bob Filner hosted a community meeting that brought together banks and small businesses to talk about increasing bank lending opportunities and the need to expand and create jobs. As editor of La Prensa San Diego which also means managing the businesses end, we wanted to attend and share our story about banking and the small business community.
La Prensa is a small business that for 34 years has struggled, survived, and grown from a staff of mostly voluntary help to a stable organization that as an economic engine has supported staff, families, and other businesses. Over the years we have pumped millions of dollars back into the economy.
As a small business we have survived the rough patches of slow cash flow and economic downturns with personal sacrifice and the small businessman’s friend, the personal credit card.
Over the years with a strong track record of longevity and solid business practices, Bank of America had extended lines of credit that have been pivotal in our survival. The lines of credit were given on the strength of the publisher’s signature.
Our publisher, Daniel L. Muñoz, passed away last year and early this year Bank of America did their best and our doing their best, to cripple this business. This is the story I would have shared with the Congressman and the banks at this meeting. Their interest does not lie with supporting and working with small businesses, but lie only in the interest of the banks.
La Prensa had been current with its payments – automatic withdrawals each month by the bank. Yet, because the publisher had passed away, the bank called in the note. They wanted full payment of the balance from the line of credit and they wanted it now – even though La Prensa has continuity in publishing (Daniel Muñoz Jr.) and has continued to regularly pay its bills.
There was no interest on the bank’s part in continuing the line of credit with the corporation. There was no interest in continuing the monthly payments. All they wanted was their $25,000 – in full. Of course considering the economy and the economy of newspapers in general, paying this lump sum was not doable.
After having to seek the assistance of a lawyer the total due was halved that and had to be paid in full within two months. Fortunately payments were made, but not without cost. The money used to pay off this one credit line could have been spread around to attend to other bills, could have been used to hire an employee, could have been used to grow the business. But none of this occurred.
The good news was that this burden was lifted and the debt was reduced. The bad news was all it did was create other burdens. Couple with this the fact our credit rating was impacted, credit card limits were reduced and our only other line of credit was discontinued. All of this based not on anything we did wrong, but solely based on the death of the signer on one line of credit and the unwillingness of Bank of America to work with this small business and mitigate the impact collecting on the balance due.
The bank had the legal right to call in the loan, we don’t dispute this. It was the total lack of interest in continuing the long term relationship, of finding a middle ground that satisfied both parties. Bank of America was not concerned if the business failed. Their only concern was in getting the most money possible as soon as possible!
This is the story I would have shared if we could have attended this meeting. While banks put up their public relations face of wanting to work with small businesses, the fact of the matter is they don’t care about small businesses, they only care about big businesses, their business.