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As Kathleen Sowa, National Business Credit Executive at Bank of America, put it, “I think we need to get the foreclosures behind us…e still have a lot of people…that can’t… afford to be in their homes…etting that problem behind us is very important for small business to move forward. ” Mr. Bell agreed and called for a mechanism to clear distressed real estate: “There is a huge unrealized and unaddressed loan loss imbedded in the banking community from real estate…If we want to get the stuff out of the system…you’ve got to create type structure. ” In addition, FDIC Chairman Bair acknowledged ongoing efforts to restore the securitization market, which will take some time to heal: “ trying to come up with better standards to bring the securitization market back in a way that will appropriately align economic incentives and ensure high quality and transparency for investors buying those securities. But I think that’s going to take a while to do. ” For the longer term, Federal Reserve Chairman Bernanke identified the need to reform the government role in housing finance: “Obviously, the biggest problem…will be the Fannie and Freddie reforms which…will be critical to reestablishing the soundness of the residential mortgage market. ” Ensuring Credit is Available to Creditworthy Borrowers Lenders’ willingness to supply credit to small businesses was another key topic. Federal Reserve Chairman Bernanke noted early signs of improving sentiment among small business lenders: “t’s certainly still a very tight situation. But I think things have stopped getting worse and are looking a little better. ” Banks naturally tightened their lending standards as a result of the recession. As Mr.

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In response to these issues, policymakers and regulators continue to actively seek ways to facilitate the flow of credit to small businesses.

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is business loan considered income e. , cash in bank, bank loan, other current assets Increase in accounts payable + Cash outflows i. e. , prepaid expenses, payment to suppliers, other current liabilitiesWorking Capital ManagementWorking capital management is very important to ensure that the company has enough funds to carry on with its day to day operations, smoothly. A business should not have a very long cash conversion cycle. A cash conversion cycle measures the time period for which a firm will be deprived of funds, if it increases its investments as a part of its business growth strategies. For this, the company has to take certain measures such as reduce the credit period of the customers, negotiate with the suppliers, and increase its own credit period with them, maintaining the right level of inventory, which reduces the raw material costs and proper cash management which ensues that cash holding costs are reduced. If these measures are followed, the requirement automatically comes down. There are a few other things to consider. If the current liabilities of a company are more than the current assets, it represents a working capital deficiency, and may sometimes lead to business debt. A deficit working capital has a negative impact on the company's image, as it depicts that the company is facing problems in liquidity, and is not able to pay for its short term costs.

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Now, as the business outlook improves, credit demand from small businesses is beginning to strengthen.

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