CIT needs $7B in next 12 months

— -- It's going to take more than a $3 billion loan to erase CIT's woes, according to a regulatory filing released by the company Tuesday.

Even so, one of the biggest hurdles approaching is the need for the company to buy all $1 billion of notes due Aug. 17, 2009. Even beyond that crunch, the capital demands at CIT are significant, approximately $4 billion, based on the Federal Reserve's stress test, the company says.

Meanwhile, the underlying business continues to erode, and the company expects to post a second-quarter loss of more than $1.5 billion. Already-hammered shares of CIT plunged 22% Tuesday, falling 27 cents to 98 cents.

"CIT is in an extremely difficult situation," says Randy Marshall of consulting and internal auditing firm Protiviti.

The challenges CIT still faces include:

•Severe cash crunch. Many CIT customers are drawing down their loan lines, making the company's cash situation worse, says Sameer Gokhale of Keefe Bruyette & Woods. CIT says it needs $7 billion in cash to continue through the next 12 months, including the $1 billion due in August.

•Tight leash by regulators. CIT was approved to become a bank holding company, which in theory allows it to take low-cost deposits and lend the cash out for a profit. But such deposits aren't going to help the company stay afloat, because the Federal Deposit Insurance Corp. has prohibited CIT from exceeding its deposit level as of July, which was $5.5 billion, Gokhale says.

•Dwindling collateral for raising additional money. To get the $3 billion loan, CIT has put up practically all its assets, meaning it will have little to offer future lenders as collateral, Gokhale says.