California Vendors Fight for Their Cash
California State Legislature could not concur on ways to close the state's $26 billion deficit, leading it to start issuing IOUs for vendor bills, personal income tax refunds, local government funding and other owed payments. In IOUs, California has issued $354 million to date and speculates it will have issued $3 billion by July's end, including $140 million to small-business owners.
Major banks originally claimed that they would honor the IOUs, but many have stopped to avoid enabling the state. Credit unions and community banks are still accepting IOUs but generally under challenging terms, forcing some owners to plan layoffs and furloughs.
Source: CNNMoney.com | July 12, 2009