Global Credit Crisis Hits Home for Businesses and Customers

While the giants of the global economy wrestled over access to commercial paper and federal bank bailouts, Mitch Rock of First Federal Advance in Rockville, MD saw six new clients this week whose bank loans fell through- Here are some examples:

· A contractor who does build-outs for Government Buildings and Office Buildings needed cash for payroll and materials. 

· A supplier of organic vitimins needed to replenish inventory, process the supplements and pay for delivery to customers.

· A firm that supplies information technology consultants to local government needed a loan against its government contract.

Rock, who normally caters to small and medium-size businesses, said he worries about how long his own lines of credits will last at reasonable rates and whether he may have to turn off the spigot himself.

“The market is so unstable and the direction in which interest rates are going, [banks] really want to keep their powder dry until they learn what kind of rates they will be able to do deals at,” Rock said. “In the next 30 to 45 days, they’re saying, they’re hoping things will turn around. In the meantime, we’re getting more and more inquiries.”

Many area businesses are feeling the crimp, if not yet the major crunch, of the credit crisis that has all but dried up the flow of capital between banks and corporate players over the past several weeks.

Major corporations based in the Washington area have turned away from the commercial paper market and to revolving lines of credit to fund their day-to-day expenses.  The owner’s of a hardware store, plumbing service or small grocery, they share a common concern over their access to credit and their customers’ ability to pay them.

A construction company in Bethesda, said credit woes have driven his business down by about 40 percent this year. On a single day recently, he lost contracts for big jobs after banks suddenly retracted the owners’ lines of credit.

 FIRST FEDERAL ADVANCE, LLC 1 (888) 621-0202

www.FirstFederalAdvance.com