Saturday, December 20, 2008

The Memorandum of Moratorium!

"Families sleepin' in their cars out in the Southwest
No job, no home, no peace, no rest, NO REST!"
 ~ Zach


We got an email this week asking, "Do you trade full-time?" 
                  ... answer, NO. (sort of) 

BOTD specializes in SMALL BUSINESS LENDING.   Our relationships with US Bank, Wells Fargo, Bank of America, CIT, etc .... have become increasingly difficult.  In 2003, 04, 05, 06, and even most of 2007 we were able to get approvals for OWNERS with at least 1 year in business and a good Dunn & Bradstreet rating.   Now, in 2008 ... DECLINED!  DECLINED! DECLINED! 

When we're not trading,  we're looking at credit.  Experian, Equifax, Transunion, DNB reports, tax returns, bank statements, and P&Ls.   Exciting stuff!   We can tell you first hand that "everyone's credit" has gone to shit.  Personal and Business credit, all bad.  Our approval percentage was in the 80% range, now it's lower than 50%.  Tough times for all.  We got a memorandum last week from a subsidiary of Wachovia saying "we are on a two week moratorium" .... no more loans!! .. WTF?!!?! ...  One of two things will happen; we'll get an email from them in 2009 saying "we are no longer in business" , or ... "our credit window has widened and we are loosening guidelines in an effort to stimulate lending"  hmmmmm.   The former seems more likely as we also got word that that subsidiary just laid off their marketing and sales staff.  All this the same week that the FED cut rates to ZERO.  Go figure. 

The UPDATED 'Restricted' List:    

1) Local & Long Haul Trucking
2) Non-Franchise Restaurants 
3) Farms
4) Real Estate & Mortgage 
5) Construction
6) Casinos 
7) Adult Industry 
8) Churches & Non-profits
9) Vending & Coin Operated Gaming
10) Oil & Gas Industry 

EXAMPLE:   let's say you're a small non-franchise restaurant owner, one location, 5 years in business with excellent credit looking for $70,000 for equipment or working capital.   guess what?  DECLINED!  or how about a residential construction company lucky enough to still have work, you sir are DECLINED!  or what about a cattle farmer, sure he's owned his land for 60 years, but he too is DECLINED!  ... our last approval that actually FUNDED was a doctor with 800+ FICO.   So bottom line for small business owners, unless you have $200,000 in cash sitting in the bank, ...  you're FUCKED.   Merry Christmas. 

p.s.  our "example" is a bit exaggerated, but you get the point.   


Anonymous said...

jeez. good info, thanks

Anonymous said...

so how are banks going to make money?

BUY ON THE DIP said...

yep, crazy times.

when we got the email saying "NO FARMS" about two months ago, that's when we brought out the PUTS OF POWER against MON. insider info, not really, but to hear that all these major banks aren't lending to the FARMING industry it threw up a big RED FLAG.

BUY ON THE DIP said...

RE: "so how are banks going to make money?"

hmmm, they're not.

if you were a bank and every loan you did for the past 4 years isn't going to get paid back, ever..... would you still loan out "new money" ?

BUY ON THE DIP said...

and that's the problem.

how can we stimulate the economy and incentivize banks to loan ???

do we just let all those "old loans" go bad ?

or throw bloody band-aids on decapitated patients, like we have been.... ?

good luck Obama.

Anonymous said...

so jan 09 all those number's come out

wow that's is kinda of crazy, if the banks just go way,

Anonymous said...

BOTD when will the shit hit the fan ..

cl said...

"Families sleepin' in their cars out in the Southwest
No job, no home, no peace, no rest, NO REST!" ~ Zach

A lyric that fits this economy, which is why you chose it i'm sure....i'm with you home skillet

killer song by a killer band btw...their first album still gets play

Danny said...

Are banks treating biz LOC the same way they are treating loans?

BUY ON THE DIP said...

on LOCs .... if the owners personal credit has any recent past dues, bye bye LOC.

we also noticed on the personal credit side that TGT, and a bunch of other retail creditors SLASHED limits to the "balanced owed" .... no more available funds.

Anonymous said...



BUY ON THE DIP said...

if you're MACY's you can get a loan. otherwise, so sorry.

Anonymous said...

BOTD, do we have any news. coming out ?

maybe we will rally , or tank this week

Troy said...

Madoff scandal broke after the deadline for folks to withdraw funds from hedgies. Q1 2009 will bring a renewed wave of redemptions. We are going down. Remember, as goes Jan goes the year.

Anonymous said...


i saw you bought calls on RIG

is it worth buying the common stock? or a little USO? because i can't trade options

still with you on FAZ loosing my ass but i have faith in BOTD... hopefuly it goes up this week.. i want to go to jerads instead of a cracker jack box

Anonymous said...

No USO, buy DXO!

Anonymous said...

HELL YES! RATM - Irvine Meadows - Best show ever!

Done trading...going back to drumming....more tail for sure!

Thanks for everything BOTD!