Corporate titans, including those with stellar ratings, are drawing on revolving bank-credit lines to secure rainy day funds until the credit markets calm down.
Figures from the central bank show that credit lines to finance trade, normally considered low-risk, are running at about half the level of mid-September.
Like bank loans, credit lines come with strictures called covenants.
According to the Federal Reserve, only about one-third of small-business applications for bank lines of credit were approved in 2009.
FORBES: Credit Card Tip Of The Week: How To Choose a Safe Small-Business Card
In 2008, Ventas accelerated its balance sheet and liquidity improvement by raising equity, selling assets and increasing bank lines of credit.
After 23 years in business the couple relies on a patchwork of bank lines and credit cards, with interest rates from 12% to 15%.
FORBES: Funding Universe Matches Entrepreneurs With Loans. Is The Advice Worth The Price?
The bank currently provides lines of credit to more than 1.5 million small businesses, he added.
Victor Shih of Northwestern University, in Illinois, thinks they could already be as high as 11.4 trillion yuan (with another 12.7 trillion in untapped lines of bank credit).
Other popular methods are borrowing money from family and friends, using home equity lines of credit, bank loans, Small Business Association loans, and even credit cards (Hisrich, et al., 2010, p. 310-313).
FORBES: So You Want To Be An Entrepreneur? Here Are Creative Ways To Fund Your New Venture
The credit rep told her the bank had seen problems on her credit reports reflecting her difficulties with her other lines of credit and had decided she had become a bad risk.
FORBES: How To Avoid The Credit Card Nightmare of Universal Default
In January, some small-business borrowers at Bank of America were asked to repay their credit lines in full.
WSJ: Wells Fargo to Increase Interest Rates on Some Small-Business Credit Lines
Few small businesses in Indonesia are able to open lines of credit with a major bank.
FORBES: Billionaire Ciputra Trains Indonesian Migrant Workers to Be their Own Boss
For a bank to boost capital by withdrawing credit or exiting important business lines would be counterproductive.
World Acceptance funds itself through lines of credit from Wells Fargo and Bank of America, so those banks already have exposure to consumers with lower credit scores, who pay higher interest and pose a greater risk of default.
Already the FDIC's available funds, including untapped credit lines from the Treasury, are equivalent to just 1.5% of total commercial-bank deposits.
应用推荐