Commercial Loan Losses Pile Up
A Stand & Poor’s article in Seeking Alpha warns of the looming disaster as unresolved commercial loans continue to grow. Lower profit margins are forcing many banks to reserve stockpiles of cash assets that they would normally extend to small businesses for start-up and expansion.
Businesses Still Can’t Borrow Money
The New York Time Small Business section summarizes the conundrum facing small businesses across industries. Despite billions of dollars of bailout and stimulus money, timid lenders are tightening credit standards to the point that small businesses without a sterling track record are left in the lurch.
How to Control Cash Flow
A PowerPoint presentation authored by the Small Business Administration (SBA) suggests that controlling your cash flow could be the key to surviving the credit crunch. The future of commercial loans could depend on these factors:
- Ratios to Watch. Days receivable, days payable and days inventory
- Program Mods. The SBA is temporarily suspending loan fees and increasing the insurance rate to 90 percent
- SBA Coverage. Credit-worthy businesses can borrow up to 6 months of payments, or $35,000
The commercial loan industry is making a fragile comeback. Small businesses that mind cash flow will improve their chances of remaining solvent.
3 comments:
Pardon the pun, but the PowerPoint presentation authored by the Small Business Administration was totally money. I'm not too familiar with the financing process and this cleared up some questions. I don't live in that state, but the process can't be too different in mine.
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