by Phil Yacuboski
Credit isn’t something small business owners should fear, according to Elaine Woodland, president and CEO, First Keystone Community Bank.
“Small businesses are the backbone of our communities,” Woodland said. “The money we loan allows them to either expand or grow. It helps employment and it helps the economy.”
Asking questions isn’t something to fear, either.
“In many cases, small businesses are a little less sophisticated,” Woodland said. “When they walk in the door, they often aren’t sure what they need or what information the bank will need.”
Woodland said the bank has a commercial lending team that is geared toward lending businesses money. They will often need projections as well as other financial information to help secure the loan. Regardless of the type of businesses seeking financial help, they look at the ability of the business to repay and then the personal financial strains of the owner and the people behind the business. She said a good personal credit score is helpful.
“If we have a business owner who comes in and we feel they have too much risk, our lenders will give them advice to help them make it better the next time they come in,” she said.
A good economy might be a sign banks – both big and small – are lending. The latest figures from the Biz2Credit Small Business Lending Index show loan approvals by big banks are at 27.5 percent; that’s an all-time high. Nearly half of all loans being sought through small banks are also being granted, according to the same survey.
“Access to credit is the same as it has been for years,” said Paul Page, executive vice-president and chief lending officer at First Columbia Bank and Trust Company. “It all depends upon the strength of the borrower. I would not say credit is tighter or easier.”
Page said in a community bank environment they don’t “open or close the credit valve.”
“We look at each borrower request on its own,” he said. “If it makes sense and we can become comfortable with the request, we move forward.”
He said in some cases, people may use credit cards to start a small business – things such as a home improvement business or landscaping – however that’s always not the best option.
“Credit cards typically will have much higher rates of interest while not providing access to larger sums of capital for bigger needs,” he said. “Banks are able to make loans of various sizes – from very small to multi-millions of dollars.”
He also said they have access to government loan programs that can provide additional flexibility.
Page said some businesses like to “think big,” but then quickly realize they may have to scale back their ideas.
“If they borrow more money than they need, that can create an issue in being able to pay it back,” he said. “If they grow too fast and don’t have access to working capital to fund that growth, that can be an issue as well.”
Page said business owners typically use credit for just about anything – including buying equipment, property and inventory as well as paying bills and taxes.
“The list can go on,” he said.
“Our doors are open,” said Woodland. “We’re a community bank, and while many banks are looking for the big loans and the bigger bang for the buck, we handle loans from $12,000 to $12 million. We have money to lend.”