Banks Getting Pickier; Borrowing Costs Increase

Even in a market of declining benchmark interest rates such as prime rate, the cost of borrowing has been increasing for even investment grade credits.

On Thursday, The Wall Street Journal (subscription required) reported that banks are prioritizing deals and have become more reluctant to tie up their balance sheets for borrowers with whom they don't have important relationships.

For companies that do get financing, the banks are apparently increasing the portion of the interest rate reflecting the "risk premium" driving overall interest rates higher.

Credit crunch, higher cost of money and a lot less "transaction only" lending is the same message I've been hearing from all the lenders with whom I speak.

If you are a small business, don't be surprised if your banker delivers the same message when you ask for a loan. Go well-prepared!

Need help finding the right lender or telling your story the right way? Read "Matchmaking for Business Loans" and give me a call!

Tags : Wall Street Journal , credit crunch , business loans , small business