ForConstructionPros.com

By: Edward Testa

If you’ve been looking to borrow so you can better meet the challenge of today’s testy business environment, no one needs to tell you about the reality of the current “credit crunch.” And, if you are yet to look for a credit facility, you may be in for an unpleasant surprise.

The Federal Reserve’s July 2008 survey of senior loan officers makes clear what’s happening with lending to businesses. About 65% of the banks involved tightened their lending practices for small businesses in the last three months, a figure that’s up from 50% the previous quarter. About 60% also reported more stringent credit standards for loans to large and middle-market companies. Plus, a very high percentage of the banks had “increased spreads of loan rates over the cost of funds.” In other words, the credit squeeze is real, and there’s no sign that it will change in the near future.

Whether it’s implementing products to meet changes in the economy, realigning business operations, or attempting to grow, credit is the lifeblood of business. And it should not be forgotten that many companies are attempting to make changes that will reduce operating costs that have been driven skyward as a result of dramatic increases in energy costs.

What makes the current situation especially problematic is even companies with gold-plated credit are reporting borrowing problems such as tighter underwriting standards and more stringent terms.

While the credit picture is more than slightly bleak, the funding faucet is not turned off. Money is available. With that in mind, here are steps to take to make your business more attractive to a lender: