SOURCE: Small Business Research Board

January 25, 2008 15:45 ET

More Than Two-Thirds of Transportation Companies to Hold Current Loan Levels Through 2008; Fewer to Seek Increases, Decreases, Says Small Business Research Board Study

Tenth in a Series -- Majority of Respondents Describe Relationships With Lenders as "Excellent" Although Challenged by Stricter Covenants, Loan Rates and Personal Guarantees

NORTHFIELD, IL--(Marketwire - January 25, 2008) - More small transportation companies participating in a nationwide Small Business Research Board (SBRB) study expect to maintain their current loan levels through 2008 with 70% indicating they will hold the line "as is" -- an increase of nearly 40% more than from the previous year.

The SBRB study of owners and managers of small transportation businesses released today also indicated that while their relationships with lenders are mostly "good" or "excellent," they are being challenged by stricter covenants, higher loan rates and greater pressure for personal guarantees.

In addition to the 70% of the owners and managers responding to the nationwide SBRB poll co-sponsored by Business Today, 5% said they would decrease their loan needs and 25% said they would seek to increase their loan limits during 2008.

On an unadjusted basis, 32% said they held the line on their loan ceilings in 2007 while 16% indicated they reduced their loan needs last year when compared to 2006. Another 36% said they increased their credit ceiling in 2007. The remaining 16% said they did not have a line of credit nor any loans.

On an adjusted basis, removing those who indicated they didn't have a loan, 38% said their 2007 loan limit was the same as in 2006 while 19% decreased their loan needs last year. The remaining 43% increased the limit in 2007.

During 2007, more than 71.4% of the participants felt that access to credit was unchanged from the previous 12 months while 28.6% said it was "easier."

The nationwide SBRB / Business Today Small Business Lending Relationship and Loan Requirements Study found 52% of the transportation businesses enjoy an "excellent" relationship with their principal lenders and 36% have a "good" relationship.

The SBRB / Business Today study also indicated that 80% of the relationships with their current principal lender have lasted at least five years, with 72% lasting 10 years or more. According to the report, 4% of the small businesses are in their first year with their current lead lender while another 4% said their relationship is in the second year.

Of these same respondents, 86.6% said they were with their previous key resource for five years or longer before making a change, with 53.3% of those lasting ten or more years. Conversely, none of the respondents said they were with their previous lender for less than two full years.

The study indicated that 40% of the owners or managers said their businesses have a relationship with one lender and 16% have a relationship with two lenders. The remainder have concurrent relationships with three or more lenders. Questions about the quality of the relationships only pertained to the principal lenders.

Additionally, 44% of the respondents said their principal lending relationship is with a local bank, 16% said the relationship is with a regional bank and 24% said the relationship is with a national bank.

The study also found that among owners and managers of small transportation companies that:

--  40.9% use their residence as collateral;
--  30.2% of those responding to The SBRB / Business Today Small Business
    Lending Relationship and Loan Requirements Study contend stricter covenants
    (23.7%),  higher loan rates  (18.4%) and greater pressure for personal
    guarantees (18.4%) are having the most significant impact on their
    business. Greater expense to obtain a loan and increased covenants also
    were among the top five most significant factors.

The SBRB report co-sponsored by Business Today solely focused on examining issues related to small businesses and their relationship with lenders. This is the tenth in a series of 11 SBRB / Business Today reports examining small business lending relationships and loan needs. Key findings in the previous reports studied the trends of all small businesses throughout the U.S. and indicated that:

--  26.8% of all respondents will raise their loan requests in 2008 for an
    increase of 3.5 points from the 23.3% of the small business which elevated
    their loan levels in 2007;
--  of those business owners using their home as collateral, 42.4% said
    their lenders had amended their borrowing levels with two-thirds (66.7%) of
    the respondents receiving higher credit ceilings and the balance receiving
    lower credit limits; and
--  higher loan rates and increasing pressure to provide personal
    guarantees are the two greatest factors impacting the relationship of small
    businesses with lenders.

The 11th and final release will detail the findings among auto and vehicle dealers. The construction and contracting, manufacturing, food and beverage, retail and distribution and wholesale industries were covered in five preceding releases.

Business Today, Inc. is dedicated to serving the information needs of owners and managers of small businesses. The primary goal of Business Today, based in Buffalo Grove, Il., is to inform and educate by providing timely, useful information that will help readers of Business Today Magazine and attendees at Business Today Workshops contend with the daily demands of running their businesses as well as provide insight on achieving long term growth. Business Today Magazine is published quarterly while Business Today Workshops are conducted throughout the U.S. to provide educational resources for entrepreneurs and their managers.

The Small Business Research Board ascertains and reports attitudes on a wide variety of national and international issues that impact small businesses. These studies benefit owners and managers and also provide opportunities for third parties to gain real time insight into the attitudes of small businesses.

The latest information about the Small Business Research Board can be found at

For more information about this poll, results of previous studies or other matters related to the Small Business Research Board, please contact Raymond D. Minkus, (847) 441-4192.

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