If nothing else, bankers say, low prices, low interest rates and plenty of inventory make this an ideal time to expand a business or buy property, buildings, even company vehicles. Yet bankers have noticed hesitancy among customers. Some won’t spend the monies they’ve been approved for, and others simply walk away before that point — they get approved, and then decline to take the next step. Whether such reluctance is tied to concern for the economic future, the upcoming presidential election or another issue, the fact remains that banks have money and are ready to lend. Of course, the new economic reality means more stringent rules are in place, but a prepared, knowledgeable business owner should be able to walk away from a lender with the extra necessary capital he or she was seeking. “You have to get your numbers straight and know them well enough to talk about them intelligently,” says Bob Wilson of StoneyWilson Business Consulting in Scottsdale.
Myth: Banks Aren’t Lending Let’s first address what bankers say is the biggest myth going these days about their industry: Banks aren’t lending or don’t have
money to lend. That’s simply not true, says Ed Zito, president of Alliance Bank of Arizona, who says banks are, indeed, responding gradually to the economic environment. For Alliance, which he calls one of the leading small-business lending banks in Arizona, the proof is in its numbers. “We never stopped lending to small and mid-sized businesses,” Zito says. “We had a $65-million net loan growth in 2009. Our net loans, after paydowns and pay-offs, grew $65 million in Arizona. In 2010, we had a net loan growth of $180 million and, in 2011, $339 million.” Doing business as usual only makes sense, say Zito and Kevin Sellers, Arizona market president for First Fidelity Bank, because banks don’t make money unless they lend money. “Your profits are determined by the growth and quality of your loan portfolio,” Sellers says, adding that it is interest income from loans, primarily business loans, that keeps a community bank afloat. Another way of putting it? “[Banks] love it when people buy things,” Sellers says. Over at Desert Schools Federal Credit Union, Gary Sneed also says the myth that banks aren’t lending isn’t necessarily true. He points to the credit union’s new sales force as evidence that finding businesses in need of
loans is a top priority. “We’ve asked them to get involved in the community,” says Sneed, vice president and chief lending officer, “and we’re also being proactive, contacting our business members to introduce lending.” Nevertheless, Zito acknowledges that the lower end of the small-business segment may have a different take on banks’ willingness to lend. While he says the industry as a whole is supportive of entrepreneurs, who are viewed as job creation engines, bankers must do their part to endure this long, slow, rocky recovery. That means entrepreneurs may not be getting what they want from every bank, he says. Says Sneed, “We still really need to be careful and prudent about whom we’re lending to.”
Banks Say, ‘Yes’; Business Owners Say, ‘Wait’ Whether they’ve heard the myth or not, business owners have not been shy when it comes to inquiring about loans. The operative word here, however, is inquiring. Wiest says the number of loans her community bank staff has reviewed — but not necessarily closed — has more or less doubled in recent times. Unfortunately, about 30 percent of loans that West Valley National Bank approves never
Gary Sneed also says the myth that banks aren’t lending isn’t necessarily true. He points to the credit union’s new sales force as evidence that finding businesses in need of loans is a top priority. 26
O c to b e r 2012
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