CIT Group has decided to stop financing loans to suppliers waiting to be paid by struggling retailer Sears, according to published reports.
The decision was initially reported by Bloomberg, which cited two people familiar with the situation.
New York-based CIT Group Inc., which makes loans to small and mid-size businesses, said it doesn't comment on specific customers.
Sears Holdings Corp., which is based in Hoffman Estates, Ill., said it disagrees with CIT's decision but said it won't have a big impact on its operations. It said that CIT's payables represented less than 5 percent of its inventories, and noted that other lenders are still financing the loans.
It also pointed to its $4.2 billion in liquidity, along with its recent restructuring moves and cost cuts.
Sears recently said it expects its fourth-quarter profit to be half of what it was last year.
The company had a disastrous holiday shopping season, with revenue at stores open at least a year falling 5.2 percent during the eight weeks ended that ended Christmas Day. The figure is a key indicator of a retailer's health because it excludes results from stores recently opened or closed.
Sears has also announced plans to close between 100 and 120 of its Sears and Kmart stores to raise cash.
In morning trading, Sears shares fell $1.51, or 4.6 percent, to $31.39. Its shares are trading near the lower end of their 52-week range of $28.89 and $94.21.