Monday, November 30, 2009

Business Lending Down Six Percent

Business loans in the third quarter of 2009 were down almost six percent according to The Wall Street Journal (subscription required).

No doubt this decline will pit those in Congress who claim that TARP funds should lead to increased lending against bankers who claim regulators are demanding that lenders take less risk in these troubled times. With a fear of a second round of troubled loans primarily in commercial real estate, banks are as risk averse as ever.

The FDIC's troubled bank list now totals 552 problem banks - approximately seven percent of all banks. Fifty banks failed in the third quarter - the most bank failures in a single quarter since the fourth quarter of 1992. "Failure Friday" took a holiday break over Thanksgiving weekend. Look for bank failures to re-commence sooner than later.

If your business loan request is already in process, you still have a chance of obtaining funding in 2009 if you are working with the right lenders. Otherwise, a 2010 funding is the more likely scenario.

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

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Monday, November 16, 2009

Walmart Shifts to Supply Chain Finance

Wal-mart recently announced a new supply chain finance program according to this weekend's Wall Street Journal (subscription required). I first wrote about supply chain finance in April 2007.

This supply chain finance program will provide Wal-mart's suppliers with accounts receivable financing - a market which has experienced significant turmoil given the bankruptcy filing of CIT and the credit crunch, in general.

Wal-mart's partner banks, including Wells Fargo and Citigroup, will be providing factoring to Wal-mart's suppliers. It is unclear whether these rates will be any cheaper than those offered by other factors and accounts receivable financiers.

The article mentioned that other retailers, including Kohl's, are also experimenting with supply chain finance programs.

If you're having difficulty with your accounts receivable funding in light of the CIT situation or general market conditions, give me a call!

Tags : Walmart , CIT , supply chain finance , accounts receivable , factoring

Tuesday, November 03, 2009

CIT, Commercial Real Estate and Workouts

Lots of issues to think about these days with respect to loan workouts, CIT's bankruptcy and commercial real estate.

  • Last week, I attended the Risk Management Association's panel discussion on loan workouts and restructurings. Panelists included three bankers from the loan workout departments and an attorney who crafts loan workout agreements. The panel's consensus was expect another year of increasing loan defaults in the world of commercial real estate and business loans. Until this workout activity starts to decline, new loan origination activity is not likely to pick up.
  • I still cannot figure out the real impact of the CIT bankruptcy. Many borrowers won't be able to find new lenders because CIT's advance rates against inventory was too high and their interest rates were too low relative to current rates. Some borrowers won't find new homes because they won't find another lender with the back-office capabilities of CIT that has traditionally provided.
  • The FDIC issued new guidance to commercial banks allowing them to keep commercial real estate loans on their books as "performing" even when the underlying property value has declined. I suppose this is similar to guidance issued for modification of residential real estate loans with the intent to avoid more losses for banks at a time when their balance sheets cannot afford the earning hit.
Need help finding the right lender or telling your story the right way for your California business? Read "Matchmaking for Business Loans" and give me a call!

Tags : CIT Group , CIT , bankruptcy , factoring , accounts receivable loans , commercial real estate , FDIC