Is Bank of America Really Cutting Small Business Credit Lines?
Image by Keith Ramsey on Flickr
In the first week of January, the Los Angeles Times reported that Bank of America was cutting the credit lines of some small businesses and demanding lump sum payments instead of monthly installments.
The Times reported that those who couldn’t make the lump sum payments would be offered longer term repayment plans — but at much higher interest rates than the money was borrowed at.
At the time, Jefferson George, a spokesman for BofA, said a “very small percentage” of small business owners were affected by the decision, which, according to George was “necessary for Bank of America to continue prudent lending to viable businesses across the U.S.” He also said that affected entrepreneurs were given a year’s notice of the change, though some business owners interviewed by The Times claim they weren’t.
But then came a more direct rebuttal from BofA.
More recently BofA has insisted that all they’ve done with this move is bring those lines of credit that didn’t formerly include maturity dates or annual renewal processes (standard terms) in line with the current products offered by the bank.
Moreover, George told Credit Union Times that “at this point the overwhelming majority of those solutions [with 98% of customers affected] involve the same interest rate as before.”
So in sum, according to George, “Contrary to any speculation, we are not cutting or closing credit lines for our small business clients across the board.”
The New York Times also has more information in this apparently still-developing story.
Has your small business been affected by changes in Bank of America credit lines? What do you think about this change in the terms of some accounts? We’d love to hear your thoughts and experiences.
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Bank of America is making our small business pay off a credit line that matured in April 2012. Today, June 11, 2012, we received a FED EX note from bank that said it has to be paid by June 18, 2012. They already scheduled a real estate broker to assess the property at our business.
REALLY need advice! We are making a quick appt. to talk to our attorney before Monday comes.
Is this legal? Can the “BIG BANK” take everything without giving us an extension. (We’ve paid every mo. on time).
bisogno
11 Jun 12 at 2:41 pm
I too am a small business that got the letter of maturity for my BofA credit line. I got approx 5 months notice. I, along with my attorney, have tried to negotiate in good faith to find a solution. BofA has been very rude and shouting matches have occurred. They will say one thing on the phone and then send documents that say another thing. They repeatedly lie to me and my attorney. They are proposing taking my 5.5% rate to 12% and adding “late fees” and “loan restructure fees” that total in the thousands. My attorney and I agree that this amounts to extorsion, as they say they will ruin my personal credit if I don’t agree to the new terms. I’ve never been late on payments or violated my terms. But BofA says the terms can change at any time, and they can choose the terms and they have in effect created terms that are impossible to keep, not to mention very expensive. It blows my mind as to why a bank would act this way, but we are living in very strange times. I wish I could just pay this off, but I just don’t have the money and nobody will refinance. BofA should be ashamed of this.
David
26 Jun 12 at 7:55 pm