eBay sellers using the SpoonFeeder listing tool and photo-hosting service discovered on Friday that the tool was no longer being supported when they received an unexpected email from the company. Gene Chandler, owner of GreatLakesSoftware.com which operates SpoonFeeder, said the problem began when his bank would not renew the commercial loan on his building.

Mr. Chandler said he would no longer be able to support the software. He estimated there were between one and two thousand active eBay sellers using SpoonFeeder, and 5,000 total casual users out of 14,000 total registrants. SpoonFeeder software resides on users' computers, but many sellers used the FTP and photo-hosting capabilities, and those would be the first to be impacted by the company's closure, he said. The software will work for a while for those with their own FTP servers. The eBay descriptions and photos also reside on the software on the users' computers, so no one should lose their data, according to Mr. Chandler.

According to the SpoonFeeder website, pricing for the tools ranged from $19.95 for a basic license to $199.95 for a Premium Deluxe license. Users could also choose a service plan ranging from a free Bronze Level service (unlimited posting of auctions and store listings, templates, scheduled listings and more) to a $40/month Platinum Level service (includes unlimited enhanced picture hosting and support for unlimited completed transactions).

Users received a letter overnight stating that SpoonFeeder would cease business operations immediately, but not explaining why. The email advised users to take immediate steps to end, revise or relist their item listings with another tool (such as eBay's free tools), as SpoonFeeder features such as picture hosting and hit counters will be discontinued abruptly. "We sincerely apologize for the inconvenience our sudden shutdown may cause."

Mr. Chandler said Great Lakes Software filed for bankruptcy, and said the servers and equipment were collateral for the bank loan. Asked why he did not give advance notice to users, he said, "up until yesterday, there was hope."

He bought the building in 2001 with a commercial loan that renewed every five years. Despite having made all payments, the bank would not renew in 2009, he said, and said the lendor was also in trouble. "They called in the loan because they need cash, and there is no hope for alternative financing." Great Lakes Software is based in Michigan, which has been particularly hard hit by the economy. "It's tragic," he said, stating that many businesses in Livingston County are in the exact same situation.

"We feel strongly we are a victim of the economic climate and banking attitudes, especially small-town banks in Michigan. The attitudes are not normal and are not financially sensible."

Spoonfeeder was targeted at the mass market - casual and small to medium sized sellers, according to Mr. Chandler, who said there were some large sellers due to the low price point. He said he was sad to see the relationship end with loyal customers.

"My main concern is to get the word out that customers should seek alternative tools immediately. I sincerely apologize for any inconvenience this causes. I've been fighting for 5 months," he said, to keep his operation going.