Small Business Lending in a Holding Pattern?

If you do any amount of flying of the friendly skies then you know that the next most dreadful announcement you’d not want to hear next to Captain Sully Sullenberger saying “BRACE – BRACE – BRACE” is your captain telling you “I’m sorry folks but it seems we are going to have a bit of a delay”.  He might as well say it: “Sorry folks, we are going to make you sit here for God knows how long.  You are going to get hot, tired, hungry, sick of hearing that baby with a tooth coming in, and your going to be just down right miserable, who knows, we may have to go back to the terminal; poor saps.”  Poor saps indeed, little does the pilot, the airline, or the airport know that you have important places to be, people to see.  You have to get moving…

In the small business banking world the same seems to be holding true, they are in a holding pattern right now.  Banks are holding on to their money with all their might.  Who can blame them, with a 150 bank closures in 2009 and a projected 200 to 300 bank closures in 2010; things are bleak for a number of financial institutions.  That being said, a number of these banks, despite the poor economy, had it coming.  A number of banks were making bad decisions, decisions that even in a robust economy should probably never have been made.  As one bank senior manager put it to me not too long ago “we were order takers”, meaning what ever the customer wanted he probably received it.  That being said, no one in the financial world saw this “Great Recession” coming and the effects its had on small businesses everywhere. 

As an ex-currently-looking-for-work-banker the words you most dreaded hearing from customers that just called you were “We need to talk, can I come in tomorrow morning?”.  In the banking world that means only one thing, the customer can’t pay you.  Here end lies the problem, banks are getting their customers that can no longer pay them back for a number of different reasons, banks are now having to work out that and multiple other bad loans, bankers who no longer are acting as lenders but as work-out officers can’t generate new loans, and new customers or good existing customers are being told that they no longer qualify; or that the bank no longer does that type of lending.  Also, a lot of existing bank customers have been getting hit with line of credit limit reductions, rates being raised, new conditions being added, additional collateral being sought, additional guarantees that need to be brought to the table, more frequent financial reporting, and a slew of other requirements and conditions. 

In upcoming blog entries I will try to assist the small business owner with ideas and other useful information when it comes to dealing with their bank and banker.  I also will try to highlight potential issues that come up from time to time in the banking and small business arenas.  I hope that by reading my blog you’ll be able to get some insight that may assist you in weathering this economic downturn, and thrive because of the information at your disposal.  Please feel free to comment on questions or topics that you want me to discuss or explain.  because as a business owner “You have to get moving and on your way…”!

Please note that there was no animals hurt during the writing of this blog, but, I did burn my lunch.  DANG!

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Branch Manager that has worked in the small to medium sized business lending field. I have experience in all types commercial lending and I'm here to provide insights from a lender's point of view. I hope to impart some knowledge that can take your business or profession to the next level. I currently work as a Branch Manager at the 10th & Bannock Office for Banner Bank in Boise, Idaho.

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2 comments on “Small Business Lending in a Holding Pattern?
  1. Corinna S says:

    And as I schedule my next payment, I’m thankful for having had a kind banker who was patient and able to help me ride out the drama. You were VERY appreciated!

  2. sblending says:

    Thanks for the kind words!

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