What a Time to Pull the Rug
With the coronavirus wreaking havoc with the economy, there is developing fear and unrest among the citizens. It’s not only citizens that are fearful. Lenders are terrified that the trillions in loans that have been put out to consumers and businesses may never be repaid. 80% of consumers live paycheck to paycheck. 90% have less than $5,000 in savings. We have seen businesses that could not endure closing for six weeks and may never reopen.
Lenders are getting more frightened by the day and are starting to take evasive action. Consumers might find the next time they pull out their Visa, MasterCard or Amex; that their credit limits have been slashed. Not helpful when you are trying to get through a pandemic. Mortgage lenders are no different than the credit card operators. Although they can’t throttle back credit to existing customers like a credit card, they can tighten up credit standards for new loans. Tighter credit standards make it difficult for homeowners to qualify to buy new homes or refinance existing ones. Those historically low interest rates are increasingly harder to get.
Banks, on the other hand, have the pulse of their corporate borrowers and can react erratically in a volatile market. Many business loans are what they call revolver loans which go up and down depending on collateral. At the slight whiff of trouble, banks can pull the rug out from under their business customers, forcing their businesses at best to scale back; at worse collapse. As business lenders get scared, they might just call in their chips and exasperate an already harrowing problem.
Luckily for the business community, all lenders aren’t the same. Although banks have strict federal requirements and oversite forcing them to make knee jerk reactions, privately owned lenders have more latitude to work with their existing clients and take on new business. Privately owned lenders like AeroFund Financial and AeroPay Express use their own funds, and in most cases, the lending decisions are up to only a few key people who don’t have the federal reserve breathing down their backs. Yes, they might be slightly more expensive, but that higher yield is meaningless if it comes with a reliable credit line to support your business.
If your business wants a lender that will be with you in good or bad times, or if you are one of those lucky essential businesses that are growing, you might want to talk with one of the professionals at AeroFund Financial. We have been supporting businesses like yours since 1987. Take a minute, give AeroFund Financial a call.