Last week, I discussed part one of my two-part series on the local lending environment. Several of our local banks offered some interesting commentary on the state of the banking industry, and some specifics on the types of loans they are writing. We also got some insights on what it takes to qualify for a loan in today’s difficult economic environment.
This week, we will continue with our survey of local banks with the following additional questions:
· For those looking for a business or personal loan, what requirements do they need to meet, in general?
Do you have any special offers right now? What are they?
What would you like the public to know about your bank or about your lending standards and available loans?
Are there any new developments with the SBA loan area that potential borrowers should know about?
Lynda Nahra, President and CEO of Community West Bank advises; “The requirements for our various types of loans can differ, but the fundamentals remain the same; repayment ability from cash flow, good credit, and valid purpose. Our Great Rate Checking is the best deal in town. This is a checking account that pays 3.49% APY on balances up to $25,000 and offers unlimited ATM access nationwide as long as a certain number of electronic and online banking functions are completed each cycle. Details can be found on our website at www.communitywestbank.com.
We are also having our annual Shred Events the last week in April at four of our local Community West Bank offices. Anyone in the community can come to these to shred materials that they want to protect from identity theft. Details of times and locations are listed on our website. The most important thing to know about Community West Bank is that we are relationship driven and believe in making banking valuable for our customers. Our remarkable staff truly leaves a lasting impression with our customers, whether through service, products, or educational opportunities. (Take a look at the Education Center on our Website). Our staff gives back too. In 2009 they provided over 2,000 hours of community service to local non-profits.
Currently (until April 30, 2010) the SBA has waived their standard fees. It is unclear at this time if Congress will approve extending the waiver. We are a preferred SBA lender, which means that borrowers can avoid the duplication of paperwork filings, among other benefits.”
Gary Kishner of Chase Bank recommends that borrowers meet with a loan officer to discuss their specific needs, as each person's situation is unique. Consumers can check www.chase.com or stop by one of their branches to meet with a loan officer to learn more about available programs and offers. Potential borrowers should know that “Chase has products and services for everyone from a high school student who needs a savings account, to a more seasoned consumer who may need private banking or investment services. Business customers of all sizes can also find a home and help with Chase. Chase is a bank that continues to lend and offer a host of financial products and services. With an SBA loan, a business can take advantage of longer repayment terms and higher borrowing limits. Qualifying criteria are generally more flexible than conventional loans. As an SBA Preferred Lender, Chase can expedite the loan approval process because we make the loan decision within SBA guidelines. All SBA loans that we write are originated and serviced through Chase. The Small Business Administration serves as a guarantor only.
Eloy Ortega, CEO of The Bank of Santa Barbara, relates; “Our credit standards have remained flexible. We customize loans to meet the client’s needs, but keep the credit within the parameters of our standard credit underwriting. Depending upon the transaction, we generally look at the prior three years of financials and tax returns for both business and individuals/guarantors. We consider accounts receivable and accounts payable history and obviously credit history in important. We focus on cash flow (we are cash flow lenders; not collateral lenders). While we do not do subprime lending, we look at much more than just an individual’s credit score to make our decisions. Those decisions, by the way, are all make right here in Santa Barbara, by local management. On occasion we run deposit promotions, but we do not have any special promotions going on right now. The primary thing I would point out is that we shop the market and strive to always have our prices in the top quartile of our market. In other words, for deposits, we want to make sure our rates are consistently competitive and remain competitive with the top quartile of all banks. We might not always pay the highest rate in town, but you will always know you are either at the top or very close to it.
We try to be competitive on price and terms, but we do not lead with price. We provide customized credit at a reasonable and competitive price. We are in the market and have money available to make loans. We are community based and community focused. We believe that loyalty is a two way street. It is not just the responsibility of the client to be loyal to the bank, but for the bank to be loyal to their clients, especially when things get tough (like now). We do not have a practice of getting in and out of specific markets and we do not use credit scoring. We will look at just about any relationship and we will give customers a quick answer.
Don Toussaint, Regional President of Rabobank, says that commercial borrowers need to demonstrate that they have stable balance sheets, good profitability and cash flow and are showing improving trends. Individuals need to demonstrate that their income is sufficient to comfortably service the debt they are taking on and they have adequate liquidity to withstand any unforeseen events. That said, we are fully aware that during these difficult times many companies and individuals are continuing to experience financial challenges and we are doing our best to work with them to structure loans that will meet their needs.
I would like the public to know that Rabobank is here to stay and that our AAA rating uniquely positions us to seek new lending opportunities despite these challenging economic times. We have a strong relationship orientation and we believe that lasting relationships can often be strengthened during challenging economic times like these.
Julie Campbell, spokesperson for Wells Fargo says that, like most financial institutions, in order for Wells to provide financing to a business, first and foremost, they want to make sure that the business has the cash flow to repay the loan. Wells looks at their cash flow relative to their existing debts and other obligations. They also look to make sure that the business, and the business owner, has a good credit history, which includes reviewing their personal and business credit bureaus. Wells wants to understand what the borrower will be doing with the loan – do they plan to expand their business, use it for working capital, etc.?
Wells also looks to see if the potential borrower is already a Wells Fargo client. Businesses that have deposit accounts with Wells already have a lot of information on file with the bank, which provides some background on their character and their ability to manage their financial situation. Before any financial institution extends credit, it wants to be confident of being repaid.
Typically, lenders ask the “Five C’s of Credit” questions, which help them develop a profile of applicants. Their answers to these questions will help a lender determine whether to extend credit. The five C’s are: Character (your credit history); Conditions (how will you use the money?); Capital (skin in the game – how much of your personal money will you invest in the deal); Capacity (how will you repay the loan); Collateral; and a sixth C, which is Customer (it pays to be an existing customer).
During the months of May and June, Wells Fargo takes time to recognize and appreciate its small businesses through our Small Business Appreciation Campaign. Business owners can take advantage of special offers during the campaign period on a wide range of products including, but not limited to, deposits, payroll, insurance and credit. Julie would like readers to know that, “at Wells Fargo we are doing our part to get consumers and businesses back on their feet by making credit available to credit-worthy borrowers in the communities where we do business. There is work to be done and we want to be a part of the solution for individual business owners and the economy in general. More than ever, our bankers are staying close to their customers to understand and help them with their current circumstances as well as their future borrowing needs.”
It is clear from these responses that our local banks are working hard to help our community by lending to qualified borrowers. While the “qualified” part is a moving target, and it is clear that to qualify today is certainly tougher than it has been for many years, there are still pools of money available to help businesses and individuals in a wide variety of ways. My best advice is, if you need a loan, pick up the phone or visit one of these banks in person. They will help you if they can, and it never hurts to ask!