Bank of America has recently trumpeted the fact that it added nearly 1,000 bankers to its small business ranks over the past year. In the first three months of 2012, according to a bank spokesperson, BofA has extended more than $3.6 billion in credit to small businesses, an increase of 14 percent over the same period last year.
But Silverman’s experience raises a question that many small businesspeople are asking in times of tighter credit and uneven profits: Are bigger banks willing to deal with the risk of a smaller business in tough times?
“It’s really a case of institutional fit,” said Charles Withee, executive vice president of The Provident Bank, a mid-sized regional bank based in Amesbury, Mass., with assets of $500 million. “Everybody has their spot.” He says if a business’s financials are basically strong, but it has hit a rough patch, “that’s the time when we do our best work,” he said.
“When times are good, anybody can do business with a big bank,” says Lisa Roberts, senior vice president of commercial lending at Champlain National Bank, an independent, community-owned bank in the Adirondack region of New York state. “We’re the smallest player in the market. If people come to us, and looking for us to get through [a rough time], we work them to get through it.”
The Adirondack region had its share of rough times this past year, suffering the same warm winter that New Jersey did, after Hurricane Irenehad shortened the fall tourist season. Champlain National offered some residents loans with interest rates as low as 1.99 percent interest, “just to help neighbors,” said Tim Kononan, vice president of commercial lending in the bank’s Lake Placid office.
Bad times can actually be an opportunity to snatch business from the big boys. “It cuts both ways,” says Withee. “We can’t be the lender to the business that needs $100 million. But if one of my lenders has been chasing the ski-boot guy forever, and suddenly gets the phone call [that their credit line has been denied], we swoop in.”
“In a bigger bank,” says Withee, “there are lines of authority that the borrower doesn’t understand. He needs help, but he’s not getting answers. It’s a process that, when things are going along well, no one notices.”
Ask Brian Delaney. He owns High Peaks Cyclery, in Lake Placid, N.Y. Thanks to the hurricane, he says, “no one came up for leaf season, and then January was dead, February was dead, and March was super-dead.”
To be proactive, he said, he was looking to refinance some property at a lower rate. “I called a few banks that didn’t even return my call. And the bank I normally work with” — a larger bank that he did not name — “offered me a rate of 6 percent. I shook his hand and said goodbye.”