| Finance

Chicago Tribune (MCT) - After four decades running his Chicago used-car dealership, Robert Glowa recently had to lay off his only employee: Robert Jr.

The 62-year-old had hoped to pass the business on to his son, a mechanic, as his father had done for him. But hard economic times nixed that plan. "I had to let him go," said Glowa, who as of last week had sold only one car in a month _ for cash.

The credit crisis has come to Main Street, or in Glowa's case, North Western Avenue. Its effects are being felt across the economy, complicating life for everybody from copy-machine resellers to retail gift boutiques, and especially the free-falling U.S. auto industry.

At heart, one of the most tumultuous periods in financial history all comes down to borrowing and lending. The nation can't function without its credit system on track, for big players and little ones alike.

Last week's unprecedented $700 billion Wall Street bailout is, above all, designed to get money flowing again, and no one can be certain it will succeed. Even if it does, some economists fear recession still looms.

The nation's economy already is showing signs of strain. Some 760,000 jobs were lost in the first nine months of the year. And in another measure of a slowing economy, tax receipts in the second quarter were down $172.5 billion compared with the same quarter last year.

For some small-business owners, obtaining credit has never been harder.

"It's a very, very tough environment," said David Hale, an economic consultant in Chicago. "It's trickling down through wealth losses in housing and the stock market and through job losses. If you depend on the consumer, obviously you're very vulnerable."

And while the credit plight of big companies has gotten attention, less concern has focused on the likes of family-run Coast to Coast Copiers in Addison, Ill., where President Tim O'Day is feeling the impact.

Many of Coast to Coast's small-business customers are having trouble coming up with a few thousand bucks to buy a refurbished machine, leading to a steep decline in his direct sales for September, O'Day said.

In the last six weeks, the budget-minded practice of leasing a used copier has gotten tougher, too, especially for the smallest accounts. Bankers are requiring entrepreneurs to personally guarantee their loans, "and even with that, not approving it," O'Day said. "Right now, the banks are sitting on cash. It's been challenging."

Similar credit issues have left Orchard Street Associates feeling caught in the middle. Its 25 manufacturer's sales representatives mostly work for small gift and home-decor vendors, which in some cases have had credit lines pulled. They sell to Ma and Pa shops that often live hand to mouth, depending on credit cards.

"We get it on both ends," said Jon Levin, owner of Orchard Street, which has offices in Chicago's Merchandise Mart.

Not every business has noticed a big difference. At Abt Electronics, President Robert Abt said credit for his retail customers remains as available as ever.

Not so for contractors and developers who buy appliances in bulk: The Glenview, Ill., merchant usually finances those accounts itself, and the real estate bust has raised the bar.

"We're tougher," Abt said. "Stricter."

On the face of it, Chicago's Winzeler Gear has a big advantage because it carries practically no debt. But the credit crunch has affected the customers, mostly auto-parts manufacturers, that order its plastic gears.

Owner John Winzeler spent part of the past month negotiating with a big supplier to Volkswagen that wanted him to front the money for a small job. He could hardly believe that a division with hundreds of millions of dollars in sales wouldn't help defray the $21,250 retooling cost, as is customary.

"We have no access to funds," the customer told him, then offered a deal: Produce the gear now, he told Winzeler. "We'll pay you next summer."

"We laughed," said Winzeler, and they eventually compromised. But all the fuss over such a small amount illustrates the depth of the credit concerns, he said. "This is another reason the auto people can't sell cars."

No one needs to explain that phenomenon to Dave Dimon, owner of a dealership that shut down at the end of August. Being a small store in the small town of Auburn, Ill., hurt, as did high gas prices, but a lack of credit was the "No. 1" factor, he said. "I didn't see the future improving."

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Car dealerships have shut down across the country, including the 3,200-employee Bill Heard Enterprises, a 14-store Chevy chain across the Deep South that accounted for more than $2 billion in sales last year. In bankruptcy papers, Heard explained that the reluctance of auto lenders to extend credit to customers had prompted a "financial liquidity crisis" at his dealerships.

Not all dealers are created equal, however.

For Bill Stasek, a Chevy dealer in Wheeling, Ill., the credit crisis has slowed sales of lower-end used cars but not much else. For customers with good credit, money is flowing. And at the high end, his Corvette business has "never been better," he said.

"The people buying Corvettes are mostly just writing a check, or financing if there's a real good rate," he said.

Stasek's service, body shop and parts business is going strong too.

Even so, he won't grow overconfident, he said. "Anybody who isn't somewhat concerned right now must be living on another planet."

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© 2008, Chicago Tribune.