The spigot of credit that fuels the bay area's economy hasn't been shut off entirely by the country's financial crisis.
But if you're trying to buy a house, finance a car, erect an office complex or build a shopping center, you'll quickly learn that the helping hands of 2005 have become the tight fists of 2008.
How bad is the credit squeeze?
Builders report that some area banks have red-lined entire neighborhoods as high foreclosure risks, choking off credit regardless of a home buyer's financial stability.
Two years ago, shopping center developers had to come up with 10 percent down payments. Now banks are asking them for 30 percent, and it's a deal-breaker in some cases.
The exotic home loans that placed financially unstable buyers in houses during the real estate boom have vanished in favor of plain-vanilla loans for the creditworthy.
And banks and credit unions are frowning on long-term car loans in which the value of the car depreciates faster than the value of the loan.
Even the state of Florida hasn't been able to borrow money for nearly three weeks, Ben Watkins, director of the division of the state's Division of Bond Finance, told Cabinet members Tuesday.
Though it doesn't need the money just yet, the state is temporarily unable to issue bonds for such projects as schools and roads.
"If you don't have good credit — somewhere well north of 600 — you won't get a loan," said builder Doug Tripp of Tripp Trademark Homes. "Clearly, the banks have got enough garbage in the pipeline. They don't want any more bad loans."
The benchmark London Interbank Offered Rate, or LIBOR, that banks charge to lend to one another rose sharply Tuesday, making it more expensive and difficult for consumers and businesses to borrow money. Credit card debt and more than half of adjustable-rate mortgages are tied to the LIBOR, so an increase can quickly affect consumers.
"What do you think the chances are of getting a loan in Lutz or somewhere else in the bay area for a condo when the banks are not lending to each other?" Miami-based banking analyst Ken Thomas said.
Hunkered-down bankers are reluctant to advance business loans, preferring to hold on to the cash.
"A deal that was done last week doesn't exist today," Thomas said. "Things are just frozen up."
Facing higher hurdles
In a bit of uncanny timing, a representative of Trump Tower Tampa, the planned 52-story condo tower, admitted Tuesday that financing what would have been the region's tallest building is a near impossibility.
"You can't put a lot of credibility into a $200-million loan approval based on what's happened in the past three to six months," said Jeffrey Warren, attorney for tower developer SimDag LLC.
Highwoods Properties, a major office park landlord in Tampa, said its credit is sound, but such optimism might not apply to some of its tenants. Highwoods president and chief executive Ed Fritsch said the credit crunch diminishes "the area's ability to attract new business and for existing business to expand."
"It may not affect their bottom line, but it certainly affects their psyche," Fritsch said of the corporate tenant pool.
Highwoods' decision in 2005 to woo recession-proof government tenants, including leasing the FBI an office in Tampa, has helped it withstand the turmoil.
Developers and businesses that are taking out a loan or credit line may find that their bankers are citing "material adverse change" clauses that affect what they can borrow. That's legalese for blaming changing conditions for scuttling or altering a deal.
Tripp, of Tripp Trademark Homes, said his business line of credit remains the same, but bankers now require him to keep several times more cash and assets on hand as collateral.
"I'm not complaining about it. The banks have been burned by other builders," he said.
July's bankruptcy of Smith Family Homes didn't win builders any friends in banking circles. Smith left behind more than $40-million in debts to lenders, including $20-million owed to SunTrust and $5-million to Wachovia.
Clean credit needed
The credit crisis began with the mortgage meltdown, and residential lending in particular still leaves bankers gun-shy. The Federal Reserve has injected hundreds of billions of dollars into the financial networks, including $20-billion Tuesday morning, in an effort to spur banks to lend more. But it has had minimal effect.
Two years ago, Les Merker was a Clearwater mortgage broker with 30 employees. This month he closed his company, Direct Lending Partners, due to poor business.
Loans are still available, but the channels are limited. Wachovia and Bank of America have shut down their wholesale lending businesses by which they sold loans through independent brokers. For the most generous terms, you'd better have a credit score over 720, Merker said.
"Here's one of the few people who's recently gotten a loan: She had 811 credit. She put 20 percent down. She was employed with a good job," Merker said. "The deal closed in 10 days, the way loans used to be."
After houses, cars are typically the second-priciest purchase a person makes, and that market is also feeling the pain. On Monday, the trade group representing Detroit's Big Three automakers' financing arms warned that, short of a bailout, the ability of manufacturers to finance motor vehicle sales may come to a halt.
For now, consumers with clean credit histories should still be able to get loans, albeit at higher rates. Those with spottier credit aren't as fortunate.
When gas prices skyrocketed, banks grew wary of loans for SUVs and pickups, but they've eased off a bit since gas prices receded, said Tom Castriota of Castriota Chevrolet in Hudson. The banks' solution is to demand bigger down payments to counteract depreciating car values.
"Have they tightened? Yes. Have they turned it off. No," Castriota said. "Bank of America, Huntington, Chase, credit unions, GMAC — there are still loans available."
Indeed, Tom Dorety, president of Tampa-based Suncoast Schools Credit Union, still offers 100 percent financing on car loans — to qualified credit union members.
But he's approving fewer loans today, both because auto sales have dropped and because the pool of creditworthy applicants has shrunk. "Because people have been impacted on a credit basis, it's harder to qualify for some car loans," he said. "Money is not as available as it used to be. There's no question about that. … These are unusual times."