Kansas Small Business Owners Relatively Unaffected by Weak Economy

Two weeks ago, Peter Salmeron obtained a $100,000 loan from RelianzBank for his growing landscaping business in Wichita, Kan.

That quick fact might suggest all is well in this slice of the nation's economy, that the financial angst that is gripping small businesses elsewhere for more than a year hasn't found its way to the Air Capital.

And for Salmeron, president of Complete Landscaping Systems, business is good. Over the past year he has more than doubled gross sales and increased the number of employees from 20 to nearly 50.

But he hasn't built up his business over 26 years without keeping an eye on the big picture that has Wall Street reeling and banks elsewhere tightening the screws on credit.

He's well aware that Congress' failure to pass the $700 billion rescue plan this week has further exasperated the nation's struggling economy and has put business owners everywhere on notice.

"I'm what you call cautiously optimistic," he said. "I don't think I've been affected by any of this right now. And if we do, it's going to be six months to a year from now."

That was the tenor of thought Tuesday from a number of those on the front lines -- small-business owners, bankers and business leaders -- during this economically challenging period.

"I don't see any pullback in our credit underwriting standards at Intrust today,"  said Intrust executive vice president Gary Schmitt. "We're still looking for good loans and good opportunities.

"No one here at the bank has said we can't make loans anymore because of the economic times."

At RelianzBank, the tune is much the same.

"For the most part, our trade in the region has been somewhat insulated from the recession that's taken place," said executive vice president and credit officer Brian Chamberlin. "From a commercial standpoint, I think we've been able to take care of just about every credit request that is of good credit quality."

At the same time, Schmitt warned, "That isn't to say this can continue and we won't feel some effect."

And the time frame?

"Who knows?" Schmitt said. "I'd like to see Washington come up with something this week, whatever that bailout may look like. That would provide some sense of stability in our economy, and then we can get on down the road and get to business."

Homebuilder Clint Miller said he hasn't had trouble getting financing to continue his work.

"Not yet," he said. "I'm assuming that we'll start feeling this stuff on Main Street in 30, 60, 90 days."

Mike Reed, president of Sunrise Oilfield Supply, said it's too soon to see how this will shake out.

"We have financing in place," he said. "Now, if activity were to go down, we would manage that internally. We don't need that much inventory now, let's work it down. Any cash we generate, let's pay off bank debt."

Dan Barnard, co-owner of B&B Airparts, said his business has been able to get the financing it needs.

"Now down the line, we might feel an impact," he said. "I expect it will smooth out by the first or second quarter."

But for now, Wichita business owners haven't felt the pinch. That's largely because the economic bedrock of the community -- aircraft, agriculture and oil and gas industries -- is strong.

Plus, the area hasn't had the huge swings in housing prices that hit other parts of the country.

"We didn't have that 20- to 25-percent increase in property values," RelianzBank's Chamberlin said, "and then all of a sudden wake up and they're underwater.

"We've just had that 3 to 4 percent steady growth."

Other than that, no one has many answers.

The economy and proposed bailout were hot topics at the Kansas Bankers Association meeting Tuesday in downtown Wichita.

"To be honest, I didn't get a whole lot out of that," Intrust's Schmitt said. "Nobody has figured it out. We're not sure of what all the issues are that put us in this mess, and thus they don't know how to solve this problem yet."

Tim Witsman, president of the Wichita Independent Business Association, agreed.

"But one thing I don't understand out of the public is why it thinks this is just some Wall Street deal," he said. "Well, folks, when the company you work for can't borrow the working capital to buy the materials to produce something so they can pay you, that's a Main Street problem -- not just a Wall Street problem."