Commercial lending

Lenders must balance the financial risk of extending credit without explicit backing from the Small Business Administration against the reputational risk of delaying aid for needy borrowers.

The central bank is creating a facility to provide financing to banks participating in the Small Business Administration’s Paycheck Protection Program.

There’s no reason to punish companies for failing to see a history-changing, once-in-a-century pandemic, or anticipate the shutdowns that would result.

Sen. Marco Rubio, R-Fla., said that $349 billion will likely not be enough meet loan demand from small businesses seeking a lifeline to help them weather the economic downturn brought on by the coronavirus outbreak.

For years, regulators have tried to make the financial system safer by blocking banks from taking on the extreme leverage that almost toppled the industry in 2008. Turns out, the risks just moved.

Speculative-grade borrowers are different because they made a conscious choice to take on more debt in the hopes of generating bigger returns for equity holders. They did this even though they knew it would make them more vulnerable in an economic downturn.

Weak demand for oil and gas, brought on by the economic fallout of the coronavirus outbreak, has raised concerns of energy firms missing loan payments or even going bankrupt. Here’s how banks and regulators are trying to get ahead of potential problems.

The 2008 package proved some banks were too big to fail. But the rushed $2.2 billion stimulus shows now any company can be bailed out.

Commercial real estate lenders have to consider not only how they’ll weather the COVID-19 downturn, but whether worker and consumer habits have changed for good.

Some corporations are willing to oblige, turning instead to new, pricier term loans or revolving credit lines rather than tapping existing ones, industry officials say.