And this concept have some small business owners VERY worried here in the Vail Valley...since that is how they operate every year.
Doesn't hurt construction businesses nearly as much because it is fairly standard to get 50% before they start and 50% when they finish...at least that's how it usually works around here.
I own a construction business General Contractor, and would be in dream land if I could take 50% up front. (I try for $10k at commencment and this doesn't come from the bank, but the homeowner who you signed the contract with)
The fact of the matter is even the $10k I take is streaching the law.
I don't get my first draw until after foundation is in. This means, I've contracted with excavation and paid for materials labor to pour the foundation (if its a difficult foundo, I hire a concrete contractor and am on the line to pay him.) Credit is my best friend, and I am constatly 60-90 extended on it.
When times were good, this worked fine, as I always had that income, but once things dried up, I found myself to be one of the lucky contractors (in this area anyway) My business was only 30 days behind (I'm 12k in the hole), whereas some are now on the line for 100+.
Mine will be managed, but most will file for bankruptcy.
One way to think about the bailout. It gets passed, as far as I'm concerned my debts are paid.
Make the house payment, and the car payment, keep a credit card for emergencies, and the rest can want and wish.
I think it has more to do with the type of business being done, and the type of billing methods being used.....
