If you’ll review past blog titles, you’ll see I’ve anticipated the current credit crunch since last summer, giving readers and clients ample time to prepare for a credit crunch that will almost certainly worsen before it becomes better.
The 1/22/06 Wall Street Journal had 46 related articles to the “credit crunch” including a great one that discussed why funding will get much harder for smaller companies (here).
Many of the biggest small business lenders are reeling with multi billion dollar sub prime mortgage losses and are reducing their lending activities. Citi recently announced they will increase rates on consumer credit and reduce lending limits on already committed and underwritten loans.
Fed Chairman Bernanke’s .75% emergency rate cut yesterday clearly helped calm the stock markets, and should help with liquidity. However, we are not out of the woods. In fact, I suspect we’re still in the middle of the forest.
As alternatives for business financing vanish, merchant cash advance has a wonderful opportunity to fill a void vacated by traditional lenders. From early evidence, that is exactly what is happening.
While some funding companies have had their credit reduced, the industry’s largest and most stable companies are adding additional lending capacity in anticipation of growing demand.
As suggested last summer, smart business owners will take the time NOW to become approved for reserve capital that can be accessed quickly in the event emergencies arise or current credit lines are reduced or eliminated.
