Company owners explain how they are scrambling to fund operations

Desperate times call for desperate measures.

Small-business owners across the Valley have adopted that attitude as the ongoing credit crunch shows little sign of easing.

They are wiping out their personal savings, outsourcing work and cutting salaries.

Other owners are opting to throw in the towel by shutting their doors or filing for bankruptcy.

The credit crunch has a direct economic effect on small businesses in Arizona - a state where 97.3 percent of employer firms are classified as small businesses, according to the U.S. Small Business Administration. Employer firms are businesses that have employees and are not sole proprietorships.

Businesses that can't obtain credit often nix expansion projects, freeze hiring and cut back on the number of employees.

Companies with healthy balance sheets and stellar credit histories say they've had luck obtaining bank financing. Still, the credit crunch, plummeting home values and the rising price of goods have pummeled consumers, who are the lifeblood of most small businesses. That has made it harder for them to maintain strong balance sheets. read more