"This unfortunate glitch in the economy hopefully will not have long legs," said Grabowsky, who owns several large commercial properties on Bloomfield Avenue.

Grabowsky said he believes in the ultimate solidity of Montclair’s business community. The township has character, "tremendous community pride," and "excellent ingredients" in terms of the beautiful old buildings in Montclair Center, which is among the municipality’s historic districts, the developer said.

He could have good cause for his optimism.

According to the U.S. Small Business Administration (SBA), which backs anywhere from 50 to 85 percent of loans for businesses having a hard time obtaining credit, the number of SBA-guaranteed loans granted to Montclair businesses remained the same in fiscal 2008 as it did in 2007.

"It’s good news not shared by many communities throughout New Jersey," said Jim Kocsi, district director for the SBA’s New Jersey office, located in Newark.

In the 2007 fiscal year, which started in October 2006 and ended the following September, the SBA approved 20 loans for Montclair merchants and companies, totaling $971,400. Meanwhile, this past year, the administration guaranteed 21 loans, for almost double the amount: $2.1 million.

Essex County, on the other hand, saw the number of loans drop from 277 to 202 during the same period, and the total dollar amount also slid from $44.5 million to $32.1 million.

In New Jersey, the number of loans has fallen about 35 percent, and nationwide the quantity of SBA-guaranteed loans has dropped over 30 percent, and the dollar amount is down 15 or 20 percent, Kocsi noted.

While lenders have raised their credit standards, demand for loans has fallen as people looking to start businesses are unwilling to take the risk, and existing businesses are shelving expansion plans, said Kocsi.

"It’s a combination of banks tightening their standards and small businessmen being spooked by the economic news they hear every day," he said.

Perhaps Montclair’s business community is being sustained through the United States’ 18-month-long economic black hole thanks to its more affluent residents, Kocsi told The Times.

People in other socioeconomic circumstances have been cutting down on fine dining and trips to the beauty parlor, and even in some cases postponing or canceling dental appointments to save cash. But a number of Montclair residents still have money to spend at the township’s clothing and gift boutiques and its many restaurants, Kocsi postulated.

Still, some merchants are seeing a loss of business even from their more elite clientele.

Zori Levine, owner of Montclair Paperie in the Upper Montclair Business District, said party planners have told her not to expect to sell invitations or custom-made beverage napkins this year for certain exclusive holiday galas thrown annually at some of the most lavish estates in Montclair.

The hosts and hostesses of those grand affairs, which can have guest lists of about 200, have decided there was little cause to celebrate this year, considering the borderline-catastrophic times on Wall Street.

As another possible sign of the times, one of Levine’s biggest custom-invitation suppliers sent out a set of about nine new designs to replace templates that were only two months old. The company emphasized to Levine, both via telephone and mail, that the new versions were at a lower price-point but were still the same top-quality goods.

It appeared to be an attempt to reel in customers who liked that company’s work but feared it might be unaffordable. It was a telling move, considering that the prices for such products generally have a non-stop upward climb every year, Levine said.

Over on Bloomfield Avenue, Grabowsky continues to wait.

His negotiations with three national chains, which are looking to open Montclair locations, are taking an unusually long time. It seems the companies are hesitating to move into town, as they nervously watch the stock market’s steep peaks and valleys lately.

Grabowsky said he’s been having talks with the three potential tenants for close to six months, but apparently their financial committees are reluctant to sign off on new locations.

"The business terms have been worked out, but they’re waiting to see how the next quarter finishes," said the property owner, a 35-year resident of Montclair.

In two instances, some sort of preliminary deal should have been struck two or three months ago. The third tenant has already been thinking things over for 120 days.

"You can typically consummate a deal in 90 days. That’s usually the timeframe" it takes to have some commitment from a corporation, Grabowsky observed, leaving only the legal details to be worked out.

But "when you seek only prime tenants, as I do, you have to deal with the vagaries of the financial markets," he said. Grabowsky pointed out that, for large operations, the decision to sign a lease involves a substantial investment.

"A national retailer might spend five to 10 times their yearly rent to build out a store to their own specifications. These national tenants have an image they want to project, a consistent corporate image, and it’s costly."

He would not specify which companies he was in discussions with, or which properties they were looking at, beyond saying all the sites were on the avenue.

Sizable publicly traded chains are hardly the only operations feeling the pinch.

Lathea Morris, credit management strategist for The Credit Alternative Group on Park Street, estimated that her company’s business has risen about 25 percent since January, and among those people turning to her outfit are small business owners seeking to manage their credit or obtain capital.

"Small business owners have always had a difficult time accessing capital," and with Wall Street seeing its darkest days since the Great Depression, it has only gotten tougher, Morris said.

Those proprietors often rely on short-term loans, which can have terms ranging from six months and up, to cover bill payment, payroll, and operational expenses, and less frequently, to fund new marketing, services, or products.

Lenders are turning away small business owners for many reasons, including the loan applicants having inaccurate credit scores or lacking business plans showing how they intend to pay back their debt.

The bleak economic climate is compounding the problem, since banks, which have already seen their stocks plummet due to unpaid residential mortgages, don’t want to take further risks.

"From the standpoint of a bank, with a tough economy, you’re concerned with the ability of any business to generate income to repay a loan," said Kocsi, the Newark SBA director.

"Big businesses have even greater assets, but even they’re having problems with short-term borrowing," meaning small businesses are facing still worse odds, said Marlene Waldock, president of the North Essex Chamber of Commerce (NECC).

Beyond the issues with loans, some businesses rely heavily on credit-card use, but companies are reducing the credit limits on cards, as well.

"The biggest issue, sometimes, is being able to buy the things you need to produce whatever you’re producing," Waldock said. Retailers who rely on credit to pay for the raw materials and manufacturing of their wares could face trouble as creditors cut back.

A lot of struggling proprietors, after being denied by banks and other lenders, are, in desperation, looking to friends and relatives for loans, "but they may find friends and family are also having challenges," Morris said.

The drop in home values after the housing bubble burst is making matters worse still, depriving some business owners of the ability to use their homes as securities to obtain loans. Merchants whose mortgages are greater than their shrunken home values cannot use their residences to get loans, since the lender granting the business loan could "get absolutely nothing" should the mortgage lender foreclose.

In those cases where the issue lay more with banking institutions’ anxiety than with borrowers, Morris has been steering her clients toward other options, such as peer-to-peer lending Web sites, including lendingclub.com and prosper.com. Through those sites, business owners can secure loans of up to $25,000, granted at terms similar to the rates charged by credit-card companies. Groups of fellow business owners and individuals pool their money to provide such personal loans.

Morris said she is also advising would-be borrowers to consider micro-loans provided by nonprofits such as the Greater Newark Business Development Consortium, and guaranteed by the SBA.

Some lenders also offer accounts-receivable financing, Morris said, where businesses pledge money they are expecting to receive from customers as collateral to obtain a line of credit.

Kocsi advised businesses to maintain their customer service even in financial adversity, to try to control their expenses, ramp up marketing when possible, and "to keep a close watch" on their own debtors.

The Small Business Administration also offers business counseling for free at any of its 11 small business development centers. One of those centers is housed in Rutgers University in Newark.

Morris said she is hopeful the federal government will authorize money for banks in some form, whether through a loan or a stock purchase, and that move "will loosen the credit markets."

Marlene Waldock, of the NECC, recommended that small business owners attend personal networking events, find people they might be able to do business with, and establish connections with other merchants who are in similar straits. Peers can help one another to strategize and adjust to the trying economic times.

"It’s important to get out there and not sit in your office, behind your desk, worrying about it," she said.

Contact Dan Prochilo at prochilo@montclairtimes.com.