With the near collapse of financial and credit institutions, many independent Berkeley businesses are taking a hard hit and experiencing a significant decrease in sales.

The turbulent economy has had a twofold effect on local retailers-a drop in sales and a lack of availability of short-term credit and loans used to fill inventory.

Haakon Thallaug, manager of Viking Trader furniture store on North Shattuck Avenue, said his sales are down by 20 to 30 percent. He said customers who cannot get loans for their homes are less likely to buy furnishings.

"Nobody's making the big purchases or they're waiting," Thallaug said.

In preparation for leaner times, Thallaug said he has contacted his bank and secured lines of credit in case he needs to fill his store's inventory.

Michael Caplan, economic development manager for the city of Berkeley, said most local businesses have not yet felt the credit crunch that many retailers nationwide are facing due to the failing economy.

"We've been calling around to business and business district leaders," Caplan said. "So far we haven't seen any evidence that it is having a huge effect yet."

Caplan said he expects the credit crunch will impact local businesses, but will not know the extent until sales tax revenue is available in the next six months.

Cynthia Kroll, senior regional economist at the UC Berkeley Haas School of Business, said it becomes difficult for businesses to take out small loans or credit to fill inventory in a frozen credit market.

"All businesses are being affected in this way," Kroll said. "Small businesses have a smaller (profit) margin to move on."

But Ted Garrett, CEO of the Berkeley Chamber of Commerce, said what troubles most Berkeley businesses is the consumers, not the credit crunch.

"What we're experiencing is not from a lack of infrastructure," Garrett said. "It's a lack of customers we are experiencing right now."

Ellen Lasher, owner of Lasher Electronics on University Avenue, said her store sales have been down 20 to 40 percent in the past three weeks. She said her store does not use credit.

"If we don't have business, we don't have (new) orders," Lasher said. "I want to be able to pay my bills in 30 days, I'll be living off stock I have already."

But some businesses, which have adapted to combat the economic downturn, have not had a significant drop in their sales.

Karen Adelman, co-owner of Saul's Deli & Restaurant on North Shattuck Avenue, said the deli has made changes, including extended hours and a menu with cheaper items.

"You really just have to stay awake or otherwise you become a fossil," Adelman said.

But Nate Alton, manager of 510 Skateboarding on Telegraph Avenue, said slow sales are typical given the time of the year.

"This a slow time of the year for us anyways," Alton said. "It's usually the calm before the Christmas storm."

However, Garrett said he and other local businesses are not expecting sales to improve during the holidays, although it is one of the biggest shopping seasons of the year.

Garrett said that it is difficult to foresee how much retail sales will suffer in today's fluctuating economy.

"That would be just looking in a crystal ball right now," he said.

Tags: ECONOMY, SALES