Bank of America severing some small-business credit lines [View all]
By E. SCOTT RECKARD - Los Angeles Times
Published Mon, Jan 02, 2012 08:20 PM
LOS ANGELES -- Bank of America Corp., under pressure to raise capital and cut risks, is severing lines of credit to some small-business owners who have used them to stay afloat.
The Charlotte, N.C., bank is demanding that these customers pay off their credit line balances all at once instead of making monthly payments. If they can't pay in full, they are being offered new repayment plans for as long as five years, but with far higher interest rates than their original credit lines had.
Business owners complain that BofA's credit squeeze is abrupt and could strain their small companies and even put them out of business.
The credit cutoff is coming at a time when the California economy can't seem to catch a break, and bucks what the financial industry says is a new trend of easing standards on business loans.