About two years before the recession hit, Kenton Neuhouser says, his accountant told him to close his business accounts at a big bank and start a relationship with a smaller, local bank.
“I never took the time to do it,” said Neuhouser, the owner of Neuhouser Nursery, which also operated a landscaping company and a garden and gift shop. “I had been with them so long,” about 30 years, he said.
That all changed one December day four or five years ago. Neuhouser called the bank and asked that some money be taken from his credit line and placed in his company’s checking account. The bank cheerfully agreed to do it.
About an hour later, though, the bank called back.
“Out of the blue they canceled the line of credit that I’d had for years,” Neuhouser said.
The bank, he said he was told, had decided that small-business loans were high risk and it was closing down its small-business lending operation.
The timing couldn’t have been worse. In the previous year, Neuhouser’s business had actually operated at a loss for the first time. All businesses rely on a line of credit, he said, but when he called other banks, “they said to come back when you show a profit again,” he said.
The change in banking policies was stunning.
“We used to be treated like royalty,” Neuhouser said.
Banks looked at businesses’ assets and willingly lent them money, and in 30 years, he said, he had never missed or been late on a payment.
Suddenly, assets meant nothing, he said.
“It’s like you wake up one day and they’re telling you the exact opposite,” he said. “They’re telling you you’re great, and then you wake up and they’re telling you your assets are worthless, you have to show better cash flow.
“Once you lose your line of credit, it’s hard to continue when the economy is bad,” Neuhouser said.
So Neuhouser was suddenly the victim of two vicious blows to his livelihood.
First, there was a recession that pinched sales.
“We had the same traffic flow,” Neuhouser said, “but the tickets were a lot smaller. Everyone was so cautious about what they spend.”
Then there was the loss of credit.
There were the constant jabs from the competition, big-box stores ranging from groceries to hardware stores to discount houses selling nursery goods.
“To be an independent business you have to stay on the cutting edge” and offer items that the big-box stores don’t sell, Neuhouser said. “You have to stay ahead.”
Then came the summer’s heat and drought. It was too hot for people to go into their gardens. Bans on watering lawns left some people with the impression that they weren’t allowed to water their gardens, either, so they quit buying plants.
Sales dropped to practically zero.
Tuesday, Neuhouser finally gave up. No financing, no sales, horrible weather had killed another local small business.
In announcing that he was closing and throwing 21 people out of work, Neuhouser put out a little plea that people shop local.
“Small businesses make up the majority of businesses in the city and state, and that money (that they make) stays in the community,” he said.
It’s an old refrain, “but unfortunately the majority of people don’t listen,” Neuhouser said. “Get out and see what the locals have to offer before you go to the big-box store and buy everything.”