The End of Small Business Loans?
Jul 16th, 2009 @ 7:00 PM by Amber Nelson
The End of Small Business Loans?
With the announcement that CIT Group is in active discussions with its principal regulators on a series of measures to improve the company’s near-term liquidity position and now working with a law firm that specialize in bankruptcy dealings, small businesses may have been dealt another costly blow.
CIT has been a major lender of small business loans, and its failure could mean an almost completely dry field for such loans in the near future. The New York Time Boss Blog reported that according to the most recent annual report filed with the Securities and Exchange Commission, CIT’s lending to these [small and medium-sized] firms totaled $21.1 billion in assets at the end of 2008.
And as the Small Business Administration claims that small businesses have made up between 60 and 80 percent of all new U.S. jobs during the past ten years, a potential disbanding of CIT would certainly have a negative impact on possible economic recoveries.
Who will step up to fill the void of Small business loans is CIT goes under. Some suggest that lenders like JP Morgan Chase, Wells Fargo and others could take over this sector, but so far no one seems to want this share of market lending. Bank of America is certainly staying out of the competition and credit card lender Advanta recently put a hold on new charges for its small business owner card holders.
There are plenty of people saying that CIT is too big for the government to let it fail. Maybe they are right this time. Besides, what’s one more bailout of a company compared with the dozens that have already been “saved” by the Feds?
Amber Nelson is a seasoned mortgage industry writer and a regular contributor to Loan.com and Mortgage101.com.
THE VICIOUS CYCLE
Does anyone see a problem with Obama’s methods in his “Rescue Plan”? It seems to me our Economy is just getting worse. The “Bail out” is a temp fix. Example, for some major corporations. Lets Pour millions and sometimes billions into say,the auto industries, to keep them from going bankrupt. Getting Handed millions of dollars to cover losses,etc. The problem I see is this:
Q. When all the old past due costs, losses, bills,etc. are “paid off” then what? The consumers (we the people) the real investors in our great nation, who make it possible, still, are not spending, we still can’t afford it. The drop of Sales has not slowed down. So after all the “pay offs” are distributed amongst the ‘higher-ups’ then bankruptcy? Or stand back in line asking the feds with your hands out, and call it an incentive?
A. Here’s an ideal, reinvest all that ‘incentive’ back into the American People. It’s your turn.. You see the economy started to go down towards the end of the ‘Bush Administration’ Cost of living went up, taxes, oil cost, well lets say pretty much everything. As the end finally was coming to Bush’s rein, upper middle class was border line ‘blue collar’ and so on. When that was realized we tightened our belts. Just getting worse as time goes by.
Now were right back where we started,except that now, we are also trillions in the hole, weaker, more vulnerable, empowered, some could even say we are now border line ‘third world’. The Vicious Cycle.
Take a look around-They say the Mexico/U.s. border crossings are at its all time low. Why do you think that is? That should have been a wake up call to our ‘higher-ups’. It’s not Working. The definition of Retardation: is doing the same thing over and over, and expecting different results..