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Financial Focus
Staying Ahead of the Credit Crunch
Toronto - After years of economic prosperity, more consumers and businesses are now facing a credit crunch. Some major institutions have pulled out of short term lending. Others are posting significant losses, which inevitably puts pressure on lending practices. Two years ago, an overabundance of money made getting a loan easy. With less money to be had, small businesses and consumers are among the first to feel the consequences.
The gloomy prospects for the U.S. economy in light of the real estate market collapse are not expected to replicate in Canada. However, this doesn’t change the fact that lenders are getting skittish about their lending practices and tightening the reins on consumer and small business loans. As a result, those that have accumulated debt in the good times – or are applying for a first or second mortgage in the bad – will be doubly challenged in the months to come.
For consumers and small businesses, avoiding a crisis starts with understanding their place on the credit crunch curve. There are a number of ways to better manage debt and access money, but the key is to be proactive and address potential problems through sound, practical strategies. For example, if a lender won’t approve a mortgage, a proposal may be the ideal way to restructure and/or manage cash flow. There are also a variety of loan consolidation options in which home owners can leverage what equity they have in their homes to gain control over their overall financial picture.
Over the next few months Exchange Morning Post will be highlighting personal and institutional credit, where to get it, and how to manage it.
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