To stave off bankruptcy, CIT Group Inc.'s board reportedly approved a $3 billion emergency loan over the weekend to aid the struggling small business lender.
CIT needs about $6 billion to avoid bankruptcy following eight quarterly losses in a row. In a July 15 statement, the company said it was advised that "there is no appreciable likelihood of additional government support being provided over the near term." CIT had previously received government funds to keep it afloat.
CUNA Senior Economist Mike Schenk told MarketWatch CIT's uncertain future may lead to even further tightening of credit. While customers with closed-end loans may be immune from CIT's financial struggles, those with open-end loans or lines of credit may have difficulty accessing each of those, he added.
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CIT has roughly one million small- and medium-size business customers with more than $60 billion in finance and leasing assets.
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