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TAMPA - CIT Group isn't as well-known as Bank of America, but the lender's fight for survival could mean just as much to thousands of Florida businesses. CIT has loaned money to roughly 44,000 small and midsize businesses in Florida, a company spokesman said. In recent years, for example, CIT had become the leading source of startup money for Beef O'Brady's franchisees, said Nick Vojnovic, chief operating officer of Beef O'Brady's parent Family Sports Concepts. Up to 40 Beef O'Brady's franchisees got loans from CIT, but since the October credit crisis the lender has virtually stopped making new loans, Vojnovic said. CIT Group, which has been pushing hard for a federal government bailout, estimates it has 1 million small and midsize business customers. The company has arranged a $3 billion emergency loan from its bondholders, but it still warns that it could have to file for bankruptcy. Here's a summary of how a CIT failure could hurt local businesses: •SBA loans. Historically, CIT has been among the top five financial institutions issuing federal SBA loans in the Bay area. Under the SBA program, a lender provides money to a small business and the federal government guarantees up to 85 percent of the loan amount. From 2006 to 2008, the company made between 33 and 45 SBA loans a year in the Bay area, making it a leading lender under the SBA program. But that's down to just one since October, said Jim Parrish, a counselor at the University of South Florida's Small Business Development Center. •Revolving loans. Unlike borrowers with one-time SBA loans, businesses that depend on CIT for a continuing source of credit may have more to worry about, said Bryan Crino, president of investment banking firm Skyway Capital Partners. "If they would shut down a revolving loan, that could theoretically put a company out of business," Crino said. •Factoring loans. CIT is a leader in issuing higher-interest factoring loans to small businesses, said Brian Smith of LCG Capital. Essentially, a factoring company loans money to a business up front, and in exchange receives the business' accounts receivable, or its future cash flows. Losing CIT would be a blow, Smith said, both directly and through the money CIT provides to other factoring companies. http://www2.tbo.com/content/2009/jul/28/...nesses-at-risk/news-money/
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