Main Street is Starving for Capital, But Sears Can Still Borrow?

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September 30, 2013

By Charles H. Green

MarketWatch reports that Sears Holdings Corp. (NASDAQ: SHLD), the surviving company that owns the remainders of two once venerable retailing giants Sears & Roebuck Co. and K-Mart, said it will meet with lenders this month to ask for a $1 billion loan. Nobody laughed.

“Sears and uglier sister Kmart have been losing sales for 26 quarters straight. Bumbling executives and their failed strategies have reeled through the retailers’ automated, sliding doors like clowns from a sputtering circus car,” was the judgment of MarketWatch writer Al Lewis .

For the three months ended Aug. 3, Sears’ quarterly loss widened to nearly $200 million, about a fifth of what it now wants to borrow — all smoked away in just 90 days of losses. Really? Can you imaging the reaction such a similar loan request would have drawn at a Main Street bank?

Since the financial crisis of 2008, there has been a series of one big corporate refinancing after the next. Companies borrow billions for stock repurchases, dividend increases, refinancings and buyouts. Earlier this month, Verizon Communications (NYSE: VZ) raised a record $49 billion in a bond offering (or, by comparison, 5x the entire 2013 SBA loan program), and the money is only going to buy part of a wireless joint venture that it doesn’t already own.

Meanwhile, over-anxious bank regulators and the fragile balance sheets among community banks have stifled much lending on Main Street. Pity.

Read more at MarketWatch.

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