Hang on for a tale of excruciating negotiations and thousand-page document requests as a small business tries to provide its landlord with a letter of credit.
There are no accounting, regulatory or industry guidelines for what constitutes an adequate allowance for credit losses. But there is a simple and common-sense ratio that's easy to calculate and explain.
Market evolution in recent decades has made it harder and harder for smaller institutions to access capital. Meanwhile, regulatory restrictions impede alternatives that could fill the void.
