Lender CIT Group, which recently obtained a $3 billion loan from its bondholders, said on Friday it will give $1 billion of that money to its trade finance unit.
The provision demonstrates CIT's commitment to support CIT Trade Finance and our clients, according to a July 31 memo sent to clients and industry associates.
The funds will help the unit meet its obligations and client needs as the parent company, which is struggling to avoid a bankruptcy filing, works on its restructuring plan.
CIT Trade Finance remains open for business, wrote the unit's president John Daly in the memo, a copy of which is available on the company's website.
CIT Trade Finance operates the lender's factoring business and is one of the company's most valuable units, a source close to CIT told Reuters earlier.
Factors buy receivables, or the right to receive money owed, from suppliers at a discount so that those suppliers can continue to have working capital. CIT gets paid back when retailers sell goods, typically within 90 days.
CIT lends to nearly a million small and mid-sized businesses and had a factoring volume of more than $42 billion in 2008.
CIT, which is trying to avoid a bankruptcy filing, secured a $3 billion emergency loan from some of its major bondholders earlier this month.
A CIT spokesman was not immediately available for comment.
(Reporting by Anupreeta Das; Editing by Carol Bishopric)