One lender, who I won’t name because this is likely much broader than them, extended my LLC a line of credit approximately 8 years ago and was trying to up sell me as late as February 20th. They just sent me notice today that they’re applying a “draw hold.”
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They have made a boatload of money on my custom, got $20 a month for keeping the line open, and charge a 30%++ APR, and even with that they’re like “Nope, odds are if he saturates the line this week that means extremely bad news for us.”
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Would this advice extend on a person level to, say, a HELOC?
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HELOCs are funded via a different mechanism than alternate lenders and the credit market for them has different constraints, but broadly, there is a reason “cash is king” gets repeated in books written by wizened old hands who have worked through many economic environments.
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Incredibly unlikely that IB specifically would make that decision except for people who have negotiated it with them. They are not in the business of imperiling the firm's capital for ~2%, and they have been sending all customers "Prepare for lower credit availability" already.
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Apropos of this: a lot of credit card lenders have been cutting limits on sockdrawered credit cards. Use it or lose it.
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If you have no revenues, your credit quality IS impaired. Pull the cash out immediately. The banks will pull all non government guaranteed credit in the foreseeable future.
Thanks. Twitter will use this to make your timeline better. UndoUndo
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Maybe people are already following your advice and lending capacity is being used up.
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Hence Fed moves to increase liquidity and cash available
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