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According to FDIC Chairman Bair, “I think maybe some banks also became a little more risk averse perhaps than they should have been. ” She added, “We’re encouraging banks. We want them to…make safe and sound loans. ” Regulators are emphasizing a back to basics approach to underwriting. As Federal Reserve Chairman Bernanke explained, “Our guidance is very clear. You shouldn’t be rejecting loans because of the industry or because of the geography, or some category. You need to look at each individual business…the only way to make loans is going to be by doing the work. ” Some forum participants also highlighted the availability of alternative sources of credit. For example, SBA Administrator Karen Mills noted that SBA lending programs reached record volumes. “he SBA in the last quarter had its strongest quarter ever in the history of the SBA. We put out $10 billion in this last quarter into the hands of small businesses.
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” Regulators are emphasizing a back to basics approach to underwriting.
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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. In such a scenario, the investors may back out on making any kind of investments in the company. Thus, financial planning, including working capital planning, is very essential to run a business efficiently.