How are banks scrutinizing existing lines of credit — will it be difficult for businesses to maintain the level of credit they currently have?
Banks are looking more closely at the credit scores of business owners, and they are setting parameters. We are examining our customers’ line of credit usage and spending time discussing their 2009 business projections. Banks must manage the risk within their portfolios, and if there is opportunity to mitigate risk by not renewing relationships that will prove detrimental to the banks’ business down the road, then banks are executing those decisions. For instance, if a business owner’s personal credit score is below the bank’s benchmark, the business itself is suffering and the owner has no plans for resuscitating lost profit, the banker may be less inclined to renew this company’s line of credit. Of course, these decisions are made on a case-by-case basis, but the message is that, yes, banks are investigating individuals in their business line portfolios. And again, this is where strong client-banker relationships can tip the scale and work in a business owner’s favor.
Related Questions
- How are banks scrutinizing existing lines of credit — will it be difficult for businesses to maintain the level of credit they currently have?
- How will the relocation of SR 95 affect the businesses that are currently located along the existing SR 95 route?
- How does the Commission propose to ensure that banks re-open credit lines for businesses?
