In a single week in March, as financial markets convulsed and major parts of the economy began shutting down, banks made over $240 billion in new loans to companies — twice as much in new lending as they would ordinarily extend in a full year, the New York Times reported. American companies are reeling from the body blow dealt by the pandemic. As revenues dwindle, travel slows and production lines halt, companies have begun to furlough or lay off employees, slash investment in operations and buy less from their suppliers. With no way to tell when the economy will restart, they are racing to conserve money and tap as much credit as possible. The new reality, say bankers and analysts, will be tough for companies that had grown accustomed to the easy money of the past decade. Enticed by ultralow interest rates, they borrowed trillions of dollars in new debt in the belief that banks would keep lending and the debt markets would always be open. Now many indebted companies, even those whose business has not taken a direct hit from the outbreak, are finding that they have to adapt to an era in which cash is suddenly much harder to raise. Consumers “are not spending money on a long list of things,” said Susie Scher, co-head of the financing group at Goldman Sachs. “If you sell or service that long list of things, if you had a weaker balance sheet to begin with, you’re going to find yourself in a deteriorating liquidity position as the economic crisis goes on,” she said, referring to a position from which obtaining cash is difficult.
