LOS ANGELES -- Bank of America Corp., under pressure to raise capital and cut risks, is severing lines of credit to some small-business owners who have used them to stay afloat.
The Charlotte, N.C., bank is demanding that these customers pay off their credit line balances all at once instead of making monthly payments. If they can't pay in full, they are being offered new repayment plans for as long as five years, but with far higher interest rates than their original credit lines had.
I have repeatedly warned small businesses of this.
Well, if your in a small business and/or use them for mortgages,the window to move them to your local "hometown" bank is closing rather quickly now.
ReplyDeleteThis is how the big banks are gonna squeeze those of us still working,and paying loans on time,AS AGREED,are going to kill what little is left of the "economy".
May all those rotten SOB'S choke on it......
CIII
AS AGREED
ReplyDeleteGuess there was small print conveniently hidden. Criminal.
This will be a cascading effect.
ReplyDeleteMore and more banks will be doing this with in a week.
Just like the snowball down the hill.
I own and operate a small manufacturing company and I can tell you from experience that the big banks are not lending but netier are the small community banks. Alot of the community banks are under instense scrutiny by federal regulators and there are forced mergers that do not make the news taking place. basically if you have an A-1 credit rating and don't need to borrow money you just might get money but if you don't you won't.
ReplyDeleteIf you are operating a business on a line of credit and really need to maintian that credit line to stay in business then you are probably going to run into trouble as things tighten up again. Luckily as a company we have a strong cash reserve and a cash flow that not only replenishes that reserve but also keeps it showing modest growth. We are able to pay cash upon ordering large expense items like raw material and do so whenever we can negotiate a cash up front payment for a 3-5% discount off market value.
Times I am afraid will again slip perhaps equal to or below where we were two years ago and when they do needing a credit line to operate will mean you are done. I would love to say we have seen the worst of this but I believe w ehave not hit bottom. We just landed on a temporary shelf that is in and of itself not stable and it will collapse under us again soon enough.
I may have mentioned this before, but when this first started my bank BB&T changed their rules drastically. For instance, my banker told me they had limited their home equity loans to $100K. I asked, if I have a home that is F&C, you appraise it at 10 million, then you would only lend $100K? She stated yes.
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