One of America's biggest commercial lenders is preparing to file for bankruptcy, the Wall Street Journal reports. CIT Group, which lends to about a million small and medium-sized businesses, probably won't be able to make a $1 billion payment due in August and has hired bankruptcy counsel. In the meantime, it's pressing the government for help with "increased urgency," says one insider.
CIT received $2.3 billion in TARP funds but has been unable to access another federal program to help it sell debt with government guarantees. The closure of CIT would affect thousands of companies ranging from restaurant frachisees to clothing retailers, notes the Journal. "It would take a financing option away from franchisees who want to buy stores or expand their networks," said a Dunkin' Donuts executive.