With deadline approaching, California small business owners still waiting for IOUs

Small business owners in California - already reeling from the announcement that they will be getting IOUs from the state government instead of checks - are facing an even more difficult situation, as many have yet to receive the notes at all.

The three major banks that are cashing the IOUs - Bank of America, Wells Fargo and JP Morgan & Chase - have indicated that they will honor their deadline of Friday, June 10th, reported multiple news sources.

For small business owners who have not received their promised IOUs, or registered warrants, and who depend on the IOUs to finance their working capital, the options are slim.

If the warrants are received after Friday's deadline, recipients may try to cash them at check-cashing storefronts or alternative lenders. They could also sell them on the third-party market, which will likely lose them money, or wait until the warrants mature in October at an interest rate of 3.75, Reuters reported.

Many small business owners, who need business financing immediately, are not in a position to wait until October or to lose money.

"We are out of cash now," Carlos Flores, the executive director of the San Diego Regional Center, told the New York Times. He is waiting for a $12 million warrant. "I can pay my staff next paycheck, and that's it."

California was one of the hardest hit states in the recession, following the subprime mortgage crisis and subsequent housing slump. The IOUs are being issued instead of payments because the state government failed to resolve its $26.3 billion budget before the new fiscal year.