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.