A Bank of Washington could help state businesses on road to recovery
Guest columnists Gregg Lanza and Makini Howell make the case for Washington state creating a state bank, similar to the Bank of North Dakota.
Special to The Times
THE promise of Democrats and Republicans finding common ground in an increasingly partisan age can often feel like a political pipe dream. But as small-business owners who are on the front lines of the economic recession, our needs go beyond politics.
One of us is a staunch Republican, the other a lifelong Democrat. Regardless of party affiliation, we are pragmatic, and we both acutely feel the credit crunch that is devastating small businesses.
Small businesses and family farmers are experiencing the greatest drop-off in lending since the Great Depression.
And even though the big banks pledged to increase their small-business lending in 2009, it has yet to happen. Even when we can get a bank loan, small businesses are getting harsher terms on those loans — higher interest rates, more collateral requirements, shorter payback periods.
Last year, one of our businesses, Noble Horse Gallery, sought a loan to help finance a move to a more-profitable location. Despite our successful business history, high credit scores and collateral, we were flatly turned down by every bank we approached.
For the other of us, our business is built on a long family tradition of small businesses in Tacoma and Seattle dating back to the early 1970s. Only after being rejected by several large commercial banks were we able to secure a loan from a community-based lender that allowed us to open Plum Bistro, a successful restaurant that has created 30 new jobs.
The availability of affordable credit can mean the difference between hiring new people to expand your business on the one hand, and cutting those jobs on the other.
That's why we've joined other small-business owners to support the creation of the Washington Investment Trust.
The concept is simple: Instead of depositing our tax dollars in an out-of-state bank, why not keep our money local, promoting economic growth?
It's based on a proven, bipartisan model. For more than 90 years, the Bank of North Dakota has partnered with local community banks to boost small-business and family-farmer lending. The bank returns profits to the state's general fund, easing the responsibility of taxpayers for funding important state priorities.
The Bank of North Dakota enjoys broad bipartisan support and has contributed to the state's healthy economy, which boasts the lowest unemployment rate in the country and a state budget in surplus. Here in Washington, Rep. Bob Hasegawa, D-Seattle, and Sen. Margarita Prentice, D-Renton, have introduced HB 1320 and SB 5238, similar bills that would create a founding task force and timeline for establishing the Washington Investment Trust, modeled after the Bank of North Dakota. In our neighboring state of Oregon, the concept is being advanced by a Republican lawmaker and longtime rancher.
Based on surveys of 107 small businesses across the state, a recent report from the Main Street Alliance of Washington found:
• More than half of surveyed small businesses have experienced the tightening of credit in their business,
• Almost three out of four of small businesses with problems accessing credit reported that they could create additional jobs if their credit needs were met, and
• 79 percent supported the creation of a Washington state community investment bank like North Dakota's; 18 percent were undecided, and just 3 percent opposed the proposal.
Small-business owners need pragmatic and creative solutions to ensure the long-term prosperity of our state, not politics as usual.Gregg Lanza, left, is the owner of four small businesses in Oak Harbor, Whidbey Island and Seattle. Makini Howell is the owner of Plum Bistro and serves on the steering committee of the Main Street Alliance of Washington, a coalition of more than 2,000 small businesses in Washington state.
When vice president of Sub Pop Records Megan Jasper isn't running things at the office, she's working in her garden at her West Seattle home where she and her husband Brian spend time relaxing.