October 10, 2008 Credit freeze leaves small businesses vulnerable Play video

(Brian Burnell, NECN) – Small companies are feeling the impact of the credit crunch as well. The owners of these small businesses are worried, because they are vulnerable when credit freezes up.

In the shop at progress incorporated in Newington, Connecticut, a worker works on a part needed to build a prototype. That's what they do here. Engineer designs and prototypes for new products for other companies. Fred Krol is the director of manufacturing and one of the owners. He worries he may start getting calls from customers who have to shut down projects because they can't borrow the money to keep them going.

Fred Krol, Progress Inc.: It lowers our confidence. We don't know if our customers are going to stop any projects or work. We really don't know the trickle down affect.

And there is certainly no way to know how many calls he's not getting from companies that planned to start projects but had to put them on hold because of the credit freeze. Connecticut senator Chris Dodd heads the senate banking committee and has been a prominent figure in dealing with the financial meltdown. He came here to meet with Fred and a dozen other small business leaders. He understands they could be in critical condition soon.

Sen. Chris Dodd, D-Connecticut: If they can't get credit to pay their employees, to buy inventory, to meet their daily obligations then, obviously, our economy is in deep trouble. And that's the heart of all this.

The squeeze

has forced Fred to think hard about whether to market a product he came up with. He got tired of finding his son's snowboards on the floor or not finding them at all when it was time to hit the slopes so he came up with a simple board bracket for the wall.

Fred Krol, Progress Inc.: There's no extra stuff you need to pull or take off to put the board on. All you do is pick up the board, push it in and you swivel it and it locks itself in.

Brian Burnell, NECN: What we're really talking about is fear of the unknown. Here at Progressive, Inc. they'd haven't had to lay off anybody yet. But they would like to hire two people but they don't dare because they don't know what's going to happen.

Don't hire. Don't market the bracket. Frozen... Until the credit market thaws. Fred hopes lawmakers understand the dilemma.

Fred Kroll, Progress Inc.: Provide some kind of incentives for small business. Please don't tax us anymore. We can't have that. Give us some sort of secureness that something is going to happen to let us continue to prosper.