I want to flag this segment from CBS News Sunday on small companies facing tighter credit. It touches on some of the things we’ve been reporting lately, including the credit crunch, companies turning to credit cards when they can’t get bank financing, and whether the bailout will help small firms.
Key quote from tech executive Bhupesh Wadahawan, whose firm was turned down for a new line of credit: “We’re now living paycheck to paycheck as a company.”
How widespread is this? What we hear about trouble in the credit market, it often refers to commercial paper (extremely short-term loans large companies make to each other) and the rates banks pay to borrow from each other. That’s all pretty abstract to most people who don’t work in finance. But when the credit crunch means your bank reduced your line so you can’t finance next month’s inventory, that’s very real. So to what extent is this happening?