A credit-crunch tale from NH in D.C.

Special to the Union Leader
Friday, Mar. 20, 2009

WASHINGTON – Mark Lane knows how to run a small business. He has run Coed Sportswear Inc., an imprinted apparel company in Newfields that supplies T-shirts to retailers, for 19 years, starting it just after graduating from business school. In 1995, President Bill Clinton presented him with the national Small Business Administration’s Young Entrepreneur of the Year Award in the White House Rose Garden.

But yesterday, Lane, who lives in Hampton Falls, returned to Washington to tell Congress he can no longer get credit to run his business.

“In 19 years of business, we never missed a bank payment, and yet we’re considered a bad loan,” Lane told the Senate Committee on Small Business and Entrepreneurship during a hearing on how the credit crunch has affected lending to small businesses.

“Mark, I think, exemplifies the true entrepreneurial spirit that we’re so proud of in New Hampshire,” said Sen. Jeanne Shaheen, D-N.H., a member of the committee. “Unfortunately, he’s experiencing the challenges that too many small businesses are experiencing, which is the difficulty in getting access to credit.”

Shaheen said 94 percent of all businesses in New Hampshire are small.

Coed Sportswear and its sister company, Printed Matter Inc., have not turned a profit in the last two years, which Lane said is directly connected to the economic downturn.

“The last two years have been a struggle for both companies,” he told the committee. “We have seen retailers consolidating, retailers going out of business, and we’ve seen, just in general, retailers generally buying less products. Our sales over the last two years have fallen almost 40 percent.”

Despite laying off 35 of the company’s 80 employees in April and suspending the company’s 401(k) matching program over the summer, in August, the company’s bank froze the $1 million line of credit for Coed and the $50,000 line of credit for Printed Matter and asked Lane to find a new bank.

Lane’s bank has extended him credit while he searches for a new lender, but finding a new source of credit has been virtually impossible, he said. Banks are “only willing to look backwards and not forwards,” Lane said, lending only to companies that have been profitable for at least six months.

Coed, while unprofitable for all of 2008, was actually profitable for the last half of the year, Lane said. But the business is seasonal, so there was not a profit in November or December, he said.

Instead of seeking the full $1 million line of credit for Coed, he has sought only to move the $50,000 line of credit for Printed Matter to a new bank.

“If I cannot secure a $50,000 loan, a line of credit, that is more than well-secured, how is it that any small business that is struggling to make money in this economy will ever receive funding to move forward?” he asked.

Senators and witnesses expressed frustration at the discrepancy between the testimony of banks, which say they are lending or are ready to lend, and small-business owners, who say they cannot access credit.

“What I’ve heard from community banks in New Hampshire is that they have money to lend and they’re ready to do that,” Shaheen said in an interview after the hearing. “And yet what I’ve heard from small-business owners like Mark is that they can’t get credit. So there’s clearly a contradiction here, and something’s not functioning as it should.”

Lane said his business also has struggled to provide health insurance for its employees. He said the company took pride in paying 100 percent of an employee’s premium, but over the past year, he has had to ask his employees to pay more.

In February, health-care insurance costs rose by 45 percent, forcing Lane to switch to a plan with even higher employee payment and fewer benefits.

“The plan went from what I considered a very good health-care plan to what now I consider almost a disaster plan,” he said. “And that’s just hard for the employees to take.”

“That’s why we’ve got to do something about health care,” Shaheen said, “and part of the discussion is around addressing cost.”

Despite the setbacks of the last two years, Lane said, he was still optimistic about the future of his business.

“Coming down here, my expectation was to tell my story, which I felt like I was able to do. To tell it to the people that can make a difference, which is what I felt like I did. And I’ve gotten a lot out of it,” he said.

Jillian Jorgensen is an intern with the Boston University Washington News Service.


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