To the Editor:

I am writing in response to the Oct. 20 letter, “Unconventional Lending Really Isn’t All ‘Subprime’ ” [page 13].

The writer notes a “great deal of confusion … about what is and isn’t subprime” in mortgage lending. This confusion exists in business credit labeling, too.

How do you classify a business owner who has had impeccable credit and then runs into a bout of cash-flow problems due to illness, a late-receivable problem, or personal credit issues resulting from divorce? Since most small-business credit is based on the principal’s personal credit, the label of subprime for business borrowing just doesn’t cut it.

“Non-A” doesn’t quite capture the right meaning, either. It’s time for the industry to step up its efforts and invent more meaningful ways to classify loan risk. New categories are needed that are more in tune with the true creditworthiness of America’s small-business owners. The problems with the current classifications (A, B, etc.) have significant consequences for small-business owners, who are often faced with paying much higher interest rates for consumer credit products — if they can get credit at all.

Oyster Financial Corp. is advocating new ways to score small-business credit. Our work will be done when these loans can be secured and when owners of consistently profitable businesses no longer need risk their homes to obtain business credit.
Margot Adam Langstaff
CEO and chairwoman
Oyster Financial Corp.Littleton, Colo.

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