Meltdown 101: What Is CIT, and What If It Fails?

You may not have heard of CIT Group Inc., but there's a good chance you've shopped in stores that it helps keep in business.

The New York-based bank is one of the nation's largest lenders to small and mid-sized businesses. Despite the scope of its customer base, however, CIT emerged from meetings with federal regulators Wednesday failing to secure the cash infusion it needs to avoid bankruptcy.

In turning CIT Group away, the Obama administration is betting that any ripple effect from the company's demise wouldn't pose a critical risk to economic recovery.

CIT Group is now rushing to raise billions of dollars in financing from debt holders, but Wall Street doesn't appear confident that the company will pull through. On Thursday, investors sold off shares and drove down the stock price 75 percent.

As the company fights for survival, here are some questions and answers about how small businesses and the broader economy are affected by CIT Group.

Q: First of all, what is CIT Group?

A: It's a century-old company that primarily provides lending to small and mid-sized businesses. To a much lesser extent, it also provides advisory services and leases out property such as airplanes and rail cars.

The company has been bought and sold a number of times over the years. Most recently, it was acquired in 2001 by Tyco International, which at the time was embroiled in an accounting scandal. To pay down debt, Tyco spun off CIT Group in an initial public offering in July 2002. CIT has been an independent public company since then.

Q: Who does CIT serve?

A: CIT says it serves more than 1 million business customers, most of them small or mid-size businesses.

The company's clients run the gamut, but tend to be in industries considered riskier in the small business landscape, such as restaurants and retail. Dunkin' Donuts franchisees and Dillard's Inc. are among the company's clients.