CIT Group Inc warned on Tuesday it could still file for bankruptcy if a cash tender offer for its outstanding notes fails, one day after securing $3 billion in emergency financing from its bondholders.

The 101-year-old company, which lends to nearly 1 million small and mid-sized businesses, also forecast a second-quarter loss of more than $1.5 billion.

In a regulatory filing, CIT said the cash tender offer for its outstanding floating-rate senior notes due August 17 was the first step in its recapitalization plan.

The lender said it could file for bankruptcy if the offer does not succeed. The offer, disclosed on Monday, is $825 for each $1,000 principal amount of notes tendered on or before July 31.

The disruptions in the credit markets that began in 2007 ... have materially worsened in the first and second quarters of 2009, the company said in the filing.

Problems at CIT emerged in the wake of Chief Executive Jeffrey Peek's decision earlier in the decade to expand into subprime mortgages and student loans.

The U.S. government declined help to CIT last week, leaving private investors as the last source of funding for the company.

Several analysts and bankers have said the $3 billion rescue financing might only delay a bankruptcy filing, in light of skittishness among CIT customers and the New York-based company's inability to readily tap capital markets.

A lot of people out there think this could be just a band-aid, said Christopher Munck, a high-yield bond trader at B. Riley & Co in Los Angeles. These guys aren't out of the woods yet, and I don't think anybody believes they are.

Keith Wirtz, president and chief investment officer of Fifth Third Asset Management, said, We think every day the odds of bankruptcy are substantially higher. They are fighting a huge uphill battle, and all the efforts ... to source temporary funding are having little reception.

CIT's floating-rate notes due in August were trading at around 88 cents on the dollar Tuesday, compared to the company's offer of 82.5 cents -- a sign that bondholders were likely to hold out for a higher price, traders said.

In all likelihood, the bondholders will counter with a higher offer and maybe they will meet somewhere in the middle, said Richard Lee, head of fixed-income at New York broker-dealer Wall Street Access in New York.

The cost of insuring $10 million of CIT debt against default for five years rose to $4.6 million upfront plus annual payments of $500,000. Late on Monday the upfront payment was $3.95 million.

This indicates both a high likelihood of default and a market perception that if a credit event occurs, the recovery levels would be low, Hexagon Securities analysts said in a research note.

CIT shares fell 30 cents, or 24 percent, to 95 cents near midday on the New York Stock Exchange.

FUNDING NEEDS

The company said estimated funding needs for the year ending June 30, 2010, include $7 billion of unsecured debt.

CIT said the New York Federal Reserve Bank on July 14 completed a preliminary stress test of the company, concluding the lender needs $4 billion of regulatory capital, including $2.6 billion of Tier-1 capital.

CIT has about $40 billion of long-term debt, independent research firm CreditSights said. The lender has lost close to $3.3 billion since the end of 2007.

A bankruptcy would make CIT, with $75.7 billion of reported assets, the largest U.S. financial company to go bankrupt since Lehman Brothers Holdings Inc last September.

(Reporting by Dena Aubin, Juan Lagorio, Lilla Zuill, John Parry, and John Stempel; Editing by John Wallace)

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