I hate to have to say it, especially since I am generally an optimist about our current credit predicament, but the worst is yet to come. The reason that I say this is because of what I call the Lagging Credit Shock Factor. Think about this: according to the FDIC, 40% of all current commercial loans will either re-price or face a maturity event in the next 3 months. We are just now beginning to see companies who 9 months ago thought "this thing will be over or at least better in 12 months" look at the expiration date of their revolving line of credit coming at them like a freight train.

Some of these companies have been brave enough to go out into the market and see where a new line would price. There are generally two outcomes from this initiative. First, they cannot find one. If they do find a line, it is generally for 300 to 400 basis points above prime (which in many cases is a 400 to 500 basis point difference), and loaded with covenants, including personal guarantees and all kinds of ominous terms that had all but disappeared from loan covenants over the last 5 years. I speak to companies all the time who are in this predicament, so if you are going through it right now, you shouldn't feel alone.

Worse, you ask. How? Well, I will tell you how. First of all there is a ton more write downs to come that financial institutions are going to have to somehow absorb which means deploying less capital. You can keep throwing TARP money at banks, but the lions share is going to maintaining solvency if that is possible. RBC last week predicted that 1 in 8 banks will fail in the next 3 to 5 years.

Typically lines have between a 1 and 5 year expiration. As the credit crisis drags on into its second year, you are starting to see more and more companies looking for a new line. This means more competition for funds that are already scarce, which gives the financial institutions even more pricing power over limited funds. The long and short of it is that we are not yet really truly feeling the effect of the credit crisis, because many companies are living in 2006 in terms of their cost of working capital. I've spoken to CEOs of too many small and mid-sized businesses to count who didn't even realize that their revolving credit facility had had a defined term with an expiration date.

From everything we are seeing and hearing at The Receivables Exchange, May 2009 will be the beginning of a very difficult time for those seeking traditional means of working capital - especially for small business owners. For small businesses, this year could be the fight of their life. The competition will be very intense, and many won't make it. Because of this the time has come for small businesses to seek alternative financing options.

Ultimately the increased cost of funds will have to be passed onto the end user - the consumer - but that is going to take 12 months to flow through the system. And, for many of these businesses, their customers simply won't be able to bear the increased cost. Naturally for the hundreds of small and mid-sized businesses who make up our Sellers on The Receivables Exchange, we are glad to be able to provide a much-needed way to monetize their receivables and change the way they think about cash flow.

Nic Perkin is Co-founder and President of The Receivables Exchange, an accounts receivable financing tool. The Exchange is the world's first online marketplace for real-time trading of accounts receivable. Find out how to trade accounts receivable.