More Bank Failures on the Way

The FDIC expects more banks to fail according to FDIC chairman Sheila Bair.

The agency now characterizes 171 institutions, with combined asset values of $116 billion, as "problem" institutions. If I'm correct, this list was at 90 back in the middle of summer 2008.

While Bair claims that "most banks remain well-capitalized, profitable, and sound," that's still a dramatic increase in the number of problem banks. It's unclear if the 171 count includes Citigroup.

As to be expected, loan defaults rates are starting to rise on business loans as the cracks in the economy start to spread. The rising default rates will add further pressure to the balance sheets of the problem banks as well at to those banks considered healthy.

Notwithstanding the credit crunch, there are banks making business loans as well as commercial finance companies, factors, leasing companies and private money lenders. Be prepared to turn over a few more stones in your search for a business loan and expect to pay higher interest than perhaps a year ago. Collateral in the form of accounts receivable, equipment and commercial real estate will give comfort to a lender trying to determine if your loan will be repaid.

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Tags : FDIC , problem banks , credit crunch , factoring , accounts receivable