CIT Group's collapse has been more than a year in the making -- and Main Street businesses began feeling the effects long ago.
When CIT Group filed for bankruptcy Sunday, it wasn't much of a surprise. The once-dominant small business lender has been largely sidelined for more than a year.
CIT Group was historically a major player in two key markets: lending to new and expanding businesses, especially franchises, and providing short-term financing for retail suppliers. On the retail side, CIT has stayed active, but its traditional lending has come to a near standstill.
Last year, CIT Group made more than 1,200 loans through the Small Business Administration's primary lending program, totaling $771 million. But in the 2009 fiscal year, which ended Sept. 30, its loan volume fell 88%. CIT Group made just 142 loans, totaling $105 million.
That sharp drop-off has left CIT's usual borrowers scrambling to find new financers.
"In the past, CIT has been an important lender to the franchise businesses," said Alisa Harrison, a spokeswoman for the International Franchise Association. "However, earlier this year they dramatically reduced their lending to the industry as a result of their financial problems, prompting franchise companies to seek alternative capital sources to replace CIT."
http://money.cnn.com/2009/11/03/smal...ion=2009110317
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