Prepare for economic change
On the surface, at least, the economy has started to turn. You need to look no further than the Bureau of Labor Statistics for proof of that. The unemployment rate either held or dropped each month from October 2009 through February, down to 9.7 percent from 10.1 percent. But talk with enough bankers and the picture comes into clearer focus.
Banks are still lending money. Banks want and need to lend money. It is, after all, one of their major sources of revenue. But according to a panel of experts, the number of loans and the amount of money requested during the last 12 months dropped significantly, and among the businesses that continued to request loans, more defaulted than normal. That led to banks examining financial statements and trends more closely. It also led to the perception that banks were holding onto their money.
“I believe many clients would say that credit underwriting is certainly more conservative. In reality, that has been the case for much longer than nine months,” says Gary Dowell, regional vice president, commercial markets, RBC Bank. “I hope that our clients would say we are willing to listen and help them through down cycles. Many banks, weakened by the economy, are simply unable to assist their clients with certain credit requests or other bank services. That has forced clients to look beyond their primary bank for financial assistance and banking services.
“The banker can help educate the client on specific credit criteria used by the bank. Those facts will help the client understand the reasons behind a particular credit decision.”
Now, with fewer banks in the marketplace, some banks can be more selective. But most are actually more open now to lending and are more forgiving. Ask around and you might find that many are breaking down the last year of financial statements for businesses seeking a loan, examining each month in search of positive trends, rather than just glazing over negative numbers from the last two or three years. Other banks are adding business bankers. Still more have recently committed billions to small and medium businesses.
The time is right to work with your bank. Just ask.