Evening star., 1942-03-08
Banks 10 Back
Small Firms in
Arms Work
Writer Finds More
Liberal Policies Are
Gaining Rapidly
By FRANK MacMILLEN,
Wide World Business Writer.

Wloe Worlo Business writer.
NEW YORK, March THE little
businesses which can do war work
can get the money from their local
banks TO finance it and II you know
Of cases you think contradict this
general statement, maybe the ap-
plicant just didn't know the ropes.
That was the conclusion this
correspondent reached after three
days of listening to speeches and
talking to dozens of bankers who
came here this week to attend q
war-lending clinic sponsored by the
American Bankers Association.
Even II you are small manufac-
turer who has tried, without sue.
cess, to get money to finance a de-
fense job, it might be worth while
to tackle your local bank again.
For conversations indicated the
attitude of bankers toward the lit
tie fellow has changed rapidly in
recent months and still is swinging
to a more liberal attitude toward
some kind Of loans formerly consid-
cred bad risks.
Real Proof Needed.
But if you own some kind Of a
small plant that can do war work.
direct or by subcontract. and need
money to swing an order. you should
go to your local bank prepared TO
show real proof:
l. That your plant machinery
probably originally intended for
some other use-really can turn out
the prospective work to Government
specifications: and these specifica-
tions are often exacting.
2. That you have an assured SUD-
ply OF the particular kind of labor
you need and can keep a force to-
gether at least until the contract Ia
paid for.
3. That priorities or ALLEGATIONS
VIII assure you enough material to
finish the job.
4. That you can figure your costs
fairly accurately on what is likely
70 be an unfamiliar type of work
and can thus show the bank YOU can
"a PA OIIG OIl lIlc contract.
II you can meet these elementary
tests, a lot Of the old difficulties
small manufacturers used to have in
getting money from banks seem to
be disappearing.
Ihls, from one of the speeches
at the war-lending clinic, shows
the changed attitude:
H1Y1
a defense loan, the credit man must
lay aside the time-honored methods
OF his trade and adopt an entirely
new approach.
Old Methods Useless.
Balance sheet ratios. bank bal
ances and even profit and loss
statements may be, and frequently
are, almost meaningless when ap-
pied to a manufacturer who is
about to fulfill Government
contract, the magnitude Of which
completely dwarfs all his previous
experience in business. In sons
cases firms have taken a single de-
tense order exceeding a full years
normal pre-War business"
1t would appear that when bank.
ers advise each other to toss ths
Old rules out the window, IL might
be worth while for small manu-.
facturers TO listen.
The extension Of credit to manu-
facturers. and especially small ones.
mas. as a general rule-and It was
PROBABLY sound one in peacetimes
been confined to carrying them
through seasonal peaks or other
unusual demands.
AT other times. the capital In
vested in the business was expected
to take care Of its needs.
The commonest turn-down from
the bank, which nearly every small
manufacturer has heard at one time
or another, is:
You don't need a bank loan.
What you need is more capital. You
are trying to do more business than
your present capital warrants"
And under peacetime conditions
the commercial banker was not In
the business Of providing permanent
capital
Three Alternatives Faced.
Faced with such an ultimatum a
small businessman would have had
three alternatives.
He would have passed up the or.
ders which required more money to
handle, he would have gotten a part.
ner to invest in the business, or he
unIlld -
banker and arranged to sell securi-
ties to the public Either of the last
two courses would have meant split.
ting his expected profit with some.
body else.
But the whole course OF the dis
cusSlon at the war clinic indicated
this old conception Of the function
OF the commercial bank was crun-
bling under the impact of war.
These, from another speaker. NAV
be words of hope to many a small
manufacturer:
we must never decline a loan for
war production unless, after COM
plete investigation and even though
we modify our usual credit stand
ards. We honestly feel that there Is
doubt OF the customers ability to
perform the contract and that We
could. therefore, never justify TAX
ing the risk"
And" he added. when I saw
complete investigation. I mean just
that. We must get out Of our SNUG
environment and investigate fully,
expending whatever time and effort
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