A Bailout For Small Business?

Chris Kelly, a 31-year employee, awaits customers at Champion Billiards & Barstools in Rockville, which is holding a going-out-of-business sale. (By Kevin Clark -- The Washington Post)   |   Buy Photo

"People are not worried about filling their houses with furniture," said Kelly, who this year filed for bankruptcy and is selling his tables -- some priced at $29,611 -- for half off. "They're worried about saving their house."

The credit crunch has benefited a few businesses, including those catering to customers who are skittish about buying new clothing and costly big-ticket items, such as cars and appliances, on credit. Some auto repair shops in the area have been getting more customers seeking to put off new-car purchases by repairing their old vehicles. And consignment shops, which allow people to save money by buying used clothing and make money by turning in their old items, have been booming.

"I've seen a 20 percent increase in traffic coming into the store" compared with a year ago, said Ellen Didion, owner and president of Chic to Chic in Gaithersburg. In a survey released this week by the National Association of Resale & Thrift Shops, 74.2 percent of the 182 shop owners interviewed said sales increased an average of 35 percent in September and October compared with last year.

Didion added that demand was so high that she decided to open a second shop, in Frederick, in September. Interest is "off the charts," she said.

But Vanessa Baugh, who owns Vanessa Fine Jewelry in Lakewood Ranch, Fla., is on the opposite end of the spectrum.

"The credit crunch has stopped everything," Baugh said, adding that her bank reduced her credit line by 30 percent and that she's had to dip into personal funds to make up the difference. Meanwhile, she said, shoppers are staying away in droves.

Last week, she said, two women were considering diamonds before getting spooked by a stock market report on their BlackBerrys. "They were like, 'Oh my gosh, the Dow just closed lower than it's been in years,' " Baugh said. "They said, 'You know what, we need to go.' "

The credit crunch has forced many businesses to become more creative.

Wal-Mart began sending interactive text messages to customers -- with photos and product ratings -- alerting them to bargains. Winn-Dixie has introduced a prepaid debit card for shoppers who may not want or be able to buy groceries with a credit card. And Brookstone, seeking to spur more store traffic, is giving customers a 15 percent discount on purchases when they bring in competitors' gift cards.

Locally, Greenwald of M&M Appliance beefed up the retail side when commercial sales, which had represented 80 percent of the business, flagged. He decided to revive his appliance-reconditioning business, expand his selection of products and keep the shop open longer hours.

Still, Greenwald said, he has yet to replace lost revenue. He has asked vendors to increase lines of credit because he doesn't always have enough money to pay them. At the same time, he's had to impose a credit crunch on his customers.

Greenwald said he dropped a 30-days-same-as-cash program for retail customers; now they have to pay upfront. And he's making sure developers have funds before he places mass orders for them.

He said he has lost too much money buying products that have sat in his warehouse for months when customers were slow to pay.

"We can't afford to go chasing our money," he said.