Global Credit Crisis Hits Home for Local Businesses and Customers

While the giants of the global economy wrestled over access to commercial paper and federal bank bailouts, John Fox of Rockland Credit Finance in Owings Mills saw three new clients this week whose bank loans fell through:

· A contractor who lays fiber-optic cable for Comcast and Verizon needed cash for payroll and materials.

· A supplier of gourmet organic coffee beans needed to replenish inventory, process the beans and pay for delivery to customers.

· A firm that supplies information technology consultants to local government needed a loan against its government contract.

Fox, who normally caters to small and medium-size businesses, said he worries about how long his own lines of credits will last at reasonable rates and whether he may have to turn off the spigot himself.

"The market is so unstable and the direction in which interest rates are going, [banks] really want to keep their powder dry until they learn what kind of rates they will be able to do deals at," Fox said. "In the next 30 to 45 days, they're saying, they're hoping things will turn around. In the meantime, we're getting more and more inquiries."

Many area businesses are feeling the crimp, if not yet the major crunch, of the credit crisis that has all but dried up the flow of capital between banks and corporate players over the past several weeks.

Two major corporations based in the Washington area have turned away from the commercial paper market and to revolving lines of credit to fund their day-to-day expenses. While Marriott International and Gannett have more options for credit than the owner of a hardware store, plumbing service or small grocery, they share a common concern over their access to credit and their customers' ability to pay them.

Dave Hoskins, owner of Right Angle Construction in Bethesda, said credit woes have driven his business down by about 30 percent this year. On a single day recently, he lost two contracts for home additions after banks suddenly retracted the owners' lines of credit.