CIT bankruptcy will affect Charlotte business
Even in a city known for banking, "CIT Group" is not a familiar name to many. So the news that CIT is filing for bankruptcy probably set off few alarms. But there are nearly a million businesses, including many in Charlotte, that will be affected by CIT's problems. WFAE's Julie Rose reports: CIT Group is pretty much a household name in the small business world. Ask any of them why CIT is so important and this is what you'll hear: "They provide all of our working capital," says Bond Isaacson, CEO of BlueTarp Financial. In other words, CIT is where a lot of small and mid-sized businesses get the money they need to cut pay checks, pay the bills and buy supplies to make their products. BlueTarp Financial is one of those companies here in Charlotte. Isaacson gets short-term loans from CIT Group and gives the money to small contractors so they can buy construction supplies. When those contractors get paid, they pay back BlueTarp. Then BlueTarp pays off the short-term CIT loan and round and round the cycle goes. If the money from CIT dries up, BlueTarp's cash does too. So Isaacson says he's looking for a new bank. "CIT is the lender to about 950,000 small businesses," says Isaacson. "That is a large chunk of people who are all out in the market right now - because of the uncertainty with CIT- all out in the market looking for alternative lending sources." But here's the trouble with that plan: "This part of the credit market is still very weak based upon the recession and CIT group provides a significant amount of funds to mom and pop retailers," says UNC Charlotte banking professor Tony Plath. "So the real concern here is, will those retailers be able to replace CIT's financing base." For now, CIT says it will continue to lend while in bankruptcy. But Plath says the question is how much the bank can lend. CIT was vague about about that its bankruptcy filing. What is clear, is many of CIT's retail customers will be especially dependent on bank during the coming holidays to keep their shelves stocked and bills paid.