BizSugar.com › Raising Capital › Borrowers wanted: Banks have cash but few clients

Billions of federal bailout dollars are flooding the financial system, credit markets are loosening and many banks say they are ready to lend. But a crucial piece needed to solve the credit crisis is still missing: borrowers.

With the economy slowing, banks are seeing a big decline in the number of people seeking loans because nervous consumers and small businesses are scaling back their borrowing.

The slide in loan demand has been a hallmark of past downturns, and it could thwart the government's attempt to increase lending with an injection of $250 billion in emergency cash. This is one problem that has nothing to do with whether a bank is healthy.