"You're joking, aren't you?" mutters businessman Ben Ridler, when the Business Herald asks if small to medium-sized enterprises (SMEs) have been finding it tough to get funds out of their banks lately.
Ridler runs The Results Group, a nationwide network of business mentoring and coaching services which deals with up to 300 SMEs a week.
"We've noticed a significant tightening [by the] banks and the type of lending they'll look at, and our clients' ability to access capital." Even worse, banks are reviewing existing loan facilities, he says.
"We don't see it getting better in the short term, and as such we've been reforecasting and rebudgeting furiously."
The banks' role in society is very simple: they collect money off savers, and pump it out to borrowers who need it.
That flow of funds is the lifeblood of an economy, and to stop it is akin to blocking an artery. Cardiac arrest is the ultimate terrible result. This week in New Zealand, the flow coagulated.
Two major deals were put on the back burner because the bankers concerned were unwilling, or unable, to come up with the funds.
PGG Wrightson's $220 million bid to buy half of meat company Silver Fern Farms - a deal seen as crucial to revitalising the flagging meat industry - was derailed after its financiers backed out at the eleventh hour.
Meanwhile, Christchurch-based Mataura Valley Milk has postponed the construction of its $90 million dairy processing plant near Gore due to delays in closing funding.
Chief executive Chris Shelley said it was "prudent" to put off construction, but the company hoped to restart the project next year.
Both decisions appeared to be a direct result of the US Congress' failure to approve the Bush Administration's original US$700 billion bailout package for America's crippled credit markets.
"This is entirely a function of the extreme financial market conditions and their impact on banks' lending capacity in the current environment," PGG chairman Craig Norgate said.
"They [banks] had the opportunity to review things and with what happened in the US on Monday night that was just too hard on the day."
These nobbled deals are the high-profile and extreme examples of a wider malaise that had already spread through the New Zealand business sector.
Ridler has experienced it first hand.
He says a major bank recently agreed to a loan facility for one of his own businesses.
When the paperwork for the loan didn't materialise, Ridler chased it up.
He was told the bank had had a change in policy, and it now required security against his house. "Which basically meant 'we're not doing the deal' because it was a seven-figure cashflow lend.
"I rang the guy and said, 'Your name's mud, you've mucked us around for six weeks,' and he said, 'Look mate, I'm sorry, but we're knocking everyone back."'
Auckland non-bank lender Cairns Lockie - which does mortgages and mortgage-backed business lending - agrees it's difficult for an SME to get in good with a financier at the moment.
Director William Cairns says borrowing for plant and equipment is particularly hard, because the finance companies used to be the source of those loans.
Now that the finance company sector has been cleaned out, very few financiers remain who are willing to lend on things like earthmoving equipment and forklifts.
Cairns says the trading banks are not interested in this type of loan. "The only way they would probably do it is like us, if you've got lots of equity in your house, they'll do a top-up on your mortgage to advance to your business."
Marac is one of the few still doing plant and equipment lending, and managing director Brian Jolliffe says its existing customers continue to be served. "This is the sort of market where relationships are everything."
But for those without an understanding with a bank or finance company life will be a lot harder, he says.
"Certainly for anyone who's currently highly geared looking to change financiers because their existing financier is not prepared to extend them any more credit, then I think it's almost impossible."
Property developers are one breed who have been virtually sent to Coventry.
Lawyer Marcus Beveridge of Queen City Law, a commercial property specialist, says the traditional structure local developers followed - use mezzanine finance to buy the land and run a marketing campaign, achieve pre-sales, then go to a primary debt provider - now does not exist, because of the finance company failures.
Practically their only option today is primary lenders, and "anything involving bare land, generally the banks don't want to touch it at the moment".
Beveridge gives the example of a client who owns a $30 million central Auckland site outright and plans to build a $120 million tower on it. In times gone by the banks would have put together a package for the entire construction fund, he says, but now they require at least $30 million of the developer's own equity.
In this case the client has the funds, but "say it was a young guy with a real vision ... he might really struggle to get any money, even if it added up".
Ian Blair, general manager of business banking at Westpac, does not deny the banks' dramatic change of heart.
He says global credit markets are effectively shut for business at the moment. But while events in the US of the past couple of weeks have significantly exacerbated the credit problem, times have been hard for a while.
New Zealand banks and their Australian parents have had trouble accessing overseas funds, and have been paying a lot more for them, for months.
While the Australasian banks do not currently have liquidity issues - Westpac raised A$1.48 billion in a bond issue across the Tasman this week, for example - they have had to preserve their liquidity and take a prudent view of where things are going, he says.
"Any credit decision we make, we take account of the external environment as well as the fundamentals of the client, and the external environment is a lot more difficult."
On top of that New Zealand's economy has slowed, and consumer confidence has flagged. Blair says as a result many companies' projected cashflows for the next 12 months will be a lot more conservative than they were in the previous year.
"So because that cashflow is less, then by definition the bank will lend less money because it would be irresponsible to do otherwise."
Westpac economist Dominick Stephens says the shutdown of the credit markets is likely to be temporary, with high hopes a revised rescue package will be actioned in the US.
While there is a slim possibility New Zealand's access to overseas funds - necessary because of our predilection for spending more than we earn - may be cut off, the real fear dampening lending here is of the unknown, Stephens says.
"Either way it's going to be more difficult or more expensive for New Zealand to source funds from offshore after this has blown over. The uncertainty is how much more difficult, and how much more expensive."
He says banks are continuing to service existing customers, in order to maintain business relationships.
But this is being done to the point where they may not actually be making a profit on recent business, because margins have been squeezed so tightly by expensive overseas money.
In that environment, "why would you expand lending?"
While lack of funding for business development is clearly not a good thing for an economy, Stephens sees the potential for good to emerge out of the upheaval. New Zealanders' reliance on debt has long been lamented, and less access to relatively cheap money may result in a change in behaviour, he believes.
"I view a lot of what's going on as a solution, rather than a problem. The problem was the binge on debt."
TIMES ARE TIGHT
* The turmoil on Wall St and the failure of Congress to pass the first rescue package has frozen credit markets through America and Europe.
* There are fears it will be difficult and expensive for Kiwi banks to access overseas funds.
* As a result the banks have had to hold on to cash - in the short term at least.
* That has derailed at least two major corporate deals this week due to lack of bank funding.
* However, a tightening of credit conditions was already under way.
* The finance company sector has collapsed, the New Zealand economy has slowed, and the banks are having to make prudent lending decisions.