A recent article in the Denver Business Journal highlights a growing issue that business owners are facing. No matter how solid your payment history and however long you’ve relied on it, owners should be aware that there’s no guarantee for renewing a line of credit.
The worst of the recession may be behind us, but banks aren’t done tightening and adjusting their processes as a result. For a business owner, this could mean losing a line of credit that has been a reliable source of capital. Now as much as ever, banks are carefully examining credit lines and more often are opting not to renew them.
Denver Business Journal reporter, Heather Draper, goes in depth on this issue in her recent article, “Colorado creditors are reaching the end of the line.” One of the reasons she cites for the increasing number of un-renewed credit lines is the real estate that often serves as collateral. With the real estate market still slow to recover from the financial crisis, banks are wary to take on this type of risk.
Business owners should be aware and proactive if relying on a line of credit for regular cash flow. If your credit line is coming up for renewal, don’t assume that it will be automatic.
Draper’s article in the Denver Business Journal can be found here.