Many businesses having hard time getting credit

Thursday, October 2, 2008

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Many businesses are finding it hard to get the credit they need to stay open.

(Bay News 9) -- The fallout from the financial crisis continues, as many Florida businesses are finding that they are having trouble getting the credit they need to stay open.

Companies that depend on credit to fund their day-to-day operations may be forced to make cutbacks, including layoffs. Even companies that still have full access to their credit lines are finding that banks are a lot less forgiving these days.

"Things happen," said small business owner Sam Varn. "A check gets missed or you don't cut a check in a timely fashion for them, or gets crossed in the mail, that type of thing. And so, today, unlike a year ago, we find that the phone rings and they say, 'You're past due, when you going to pay this bill?' And, of course, we tell them that the check's in the mail."

Economists are also worried about the credit crunch's impact on state government, which largely depends on the sales tax. As more businesses close their doors, consumer spending falls. As a result, every dip in corporate and consumer spending could lead to more budget cuts.

Credit tightens ahead of crucial House vote

NEW YORK (AP) -- Despite the Senate's approval of the $700-billion financial bailout plan, the credit market remains troubled. Investors wait for the revised bill to go back to the House.

The market for loans has seized up in recent weeks, hurting companies and governments in need of short-term cash.

Natural gas marketer Catalyst Energy filed Chapter 11 bankruptcy after the nation's largest energy marketer, Constellation Energy, pulled its credit line. California's top financial officials have said the state's ability to do short-term borrowing is threatened. Auto parts maker Dana Holding said it drew $200 million from its $650-million credit facility due to "uncertainty in the financial markets."

The London Interbank Offered Rate, known as LIBOR, for 3-month dollar loans rose to 4.21 percent today. The rise suggests that banks are getting even more tight-fisted with their cash.

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