Released on: May 29, 2008, 2:39 am

Press Release Author: Joshua White

Industry: Financial

Press Release Summary: Information Services providing educational tools to small
business owners

Press Release Body: Small businesses are finding it more difficult to obtain
financing and are the ones most adversely affected by the lending crunch because
they are unable to obtain intermediate business lines of credit. Although the Fed
has made concessions which include short term loans in the amount of $100 billion,
small business owners have yet to benefit.

For the first time in decades credit is especially tight as the bursting of the
housing bubble has spread misery across the financial system. Banks and investors
become wary of lending funds to corporations, thereby driving up the price of debt
products for borrowers.

Credit crunches are usually considered to be an extension of recessions. A credit
crunch makes it nearly impossible for companies to borrow because lenders are scared
of bankruptcies or defaults, which results in higher rates. The consequence is a
prolonged recession (or slower recovery), which occurs as a result of the shrinking
credit supply.

This credit crunch is unlike any other in the fact that banks actually have the
money to lend but are scared to right very many loans. Banks are opting to play it
safe by adhering to their strict requirements of a 680 credit score or higher and
requesting tax returns for business lines of credit as low as $10,000. Before the
credit crunch, it wasn't uncommon to obtain a business line of credit with a 620 and
tax returns weren't required (except for lines over $50,000).
Doug Eddings, a 35-year-old small-business owner in Portland, OR, says three of his
credit-card issuers all took steps in recent weeks to tighten his credit, either by
raising his interest rate, halving his available credit or freezing his accounts.
First, he received a notice from Chase in June notifying him that it was going to
raise the interest rate on his Chase Amazon card to 29% from 17%. Soon after,
another lender, HSBC Holdings PLC\'s HSBC North America, dropped his $5,000 credit
line on his Best Buy store card to $2,105 -- just $5 above his current balance.
So what is a business in need of a loan to do? The best alternative in any market
condition is to obtain trade lines of credit. Subsequently, trade lines of credit
are the largest source of lending in the world, but the banks won't tell you that.
Trade credit is the extension of credit between two corporations. For instance, if
you needed to buy a $10,000 copier, you could either obtain a line of credit from
the bank and pay prime plus or go directly to the manufacture of the copy machine
and ask them to sell you a copier on terms. In most cases, the terms are more
favorable and the requirements are less stringent because trade creditors don't
require personal guarantees (but they do require borrowers to be in compliance).
Compliance is a set of standards that must be met to be considered a legitimate
business. For more information about business lines of credit, trade lines of
credit and compliance requirements and other topics like this, visit
www.iusecorporatecredit.com


Web Site: http://www.iusecorporatecredit.com

Contact Details: Company Name: JP Meyer Investments
Street Address: 25037 Chambley Dr.
Town or City: Southfield
State or Province: Michigan
Zip or Postal Code: 48034
Country: United States