The CIT Group filed for bankruptcy over the weekend, which again spells more bad news for the fashion industry. CIT was the one of the USA’s largest lenders to retailers. More importantly, it advanced loans to more than 60% of US apparel makers.
Three months ago, the US government denied CIT a bailout because it felt CIT was small enough to let fail. Nevertheless, this bankruptcy filing will affect a critical mass. Relatively few companies offer factoring services, a type of lending that CIT provides. Experts say other lenders are unlikely to be able to scoop up the demand for factoring in CIT’s wake — that leaves many small businesses in the fashion industry out of funds for the next few seasons. Companies such as Trina Turk are likely to be affected.