The following is from the Aug 11, 2007, edition of The Dallas Morning News
By ANGELA SHAH
The Dallas Morning News
A running-scared Wall Street is impacting business in North Texas, as Dallas investment banker David Mahmood saw this week when he tried to complete $90 million in private financing for a California client.
The client, a technology company that makes electronic consumer goods, needed money to see it through the manufacturing process in China, then to retail sales during the make-or-break Christmas season.
"The lender backed out yesterday, so now we're scrambling," Mr. Mahmood said Friday. "If we can't raise enough money, [the company] will lose tens of millions of orders."
Mr. Mahmood's firm, Allegiance Capital Corp., managed to secure $50 million, but the lender is demanding that Allegiance come up with $10 million from another source before it will put in the remaining $40.
"We're not concerned about getting it done, but it's indicative of the fact that the market is tightening up," said Mr. Mahmood, founder and chairman of the firm specializing in loans for small to midsize companies. . .
Now those in the credit industry are watching for signs that the liquidity crunch will impede business growth in Dallas.
"Bankers have already started tightening lending standards," said Jerry White, director of the Caruth Institute for Entrepreneurship at Southern Methodist University.
"It's a bit quick to see how it will play out in the credit markets for small-business lending today," he added.
The greatest risk for smaller businesses is not higher interest rates, he said, but that capital might simply dry up.
"It would kill them if they tightened up on that," he said.
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