Crucial Short-Term Loans at Risk Under Proposed Rules

Proposed capital-rule changes aimed at reducing risk in the banking sector are riling up an important corner of short-term lending that companies rely on for emergencies as well as acquisitions.

Under a sweeping set of rules regulators proposed in July, the biggest US banks would have to hold significantly more capital against credit facilities that last less than a year, putting them on the same footing as long-term loans. As a result, there could be a major contraction in that popular form of credit, bankers and regulatory lawyers said. Top-notch borrowers will either face higher costs or shift into longer-term ...