SMBs scramble for alternative lending as CIT seems likely to fall

July 17, 2009 | Print this Page.
The threatened fall of small business lender CIT is causing small businesses to scramble for alternative capital solutions
Small businesses are waiting with bated breath to learn the fate of one of their leading lenders, CIT Group Inc.

With the announcement early this week that CIT was racked by a liquidity crisis and approaching bankruptcy, many feared that the impact of its fall would send shock waves throughout the small business community, and consequently the economy as a whole.

Following the announcement, and the consequent expectation that the government will not step in for a bailout, small business owners around the country are scrambling to find alternative lenders to meet their business financing needs.

Lori Coughlin, owner of The Cat Practice in Oak Park, Illinois, told the Chicago Tribune that her $1.4 million business loan from CIT is at risk. "I'm not in a position to pay off a very large sum of money," she told the newspaper.

Other small businesses are having to pay employees out of pocket, or rush to find financing from alternative lenders faced with the tightened credit and hesitant lending of traditional banks.

The latest news indicates that CIT may be in talks with JP Morgan & Chase and Goldman Sachs Group Inc regarding $2 to $3 billion in short-term financing, reported Reuters.

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