Navigating as a small business owner can be daunting, especially during a pandemic. But with a little insight and planning, businesses can chart a smart course in these uncertain times.
Have lenders changed their operations or lending procedures during the COVID-19 pandemic?
Certainly, some lenders are taking a step back and scrutinizing their practices at this time. Typically, when you see a volatile market, commercial lenders are the first to step back so they can observe and see what’s going on with the economy. They restrict lending practices and wait to see the results of economic changes.
We see it with some national lenders. But, many local lenders are not backing down. On the contrary, community-focused lenders continue to support the business community and help the local economy thrive. If a business ticks the normal guidelines boxes, local lenders are more than willing to lend to them.
The pandemic has changed the way many local businesses operate. Do lenders require different financial information taking this into account?
Many lenders are asking for information on how the business has held up during the pandemic. This includes year-to-date profit and loss information that is updated at least 90 days from the date of the request (i.e. a request in November would require 2020 profit and loss information through at least August). We want to see what COVID-19 has done to the business and how the owner is coping with the changes.
What should business owners be looking for in a potential lender right now?
Business banking is all about finding a good partner. An investment banker should not only help a business owner open an account or obtain a loan. They need to communicate frequently with the business owner to get a good idea of how they operate. In addition, they must maintain the company’s financial information and review it regularly. They can then compare this information to industry benchmarks and help the business owner operate with greater financial efficiency. Your relationship with your investment banker can mean the difference between average performance or above-average growth. NBF
By Ian Cribbs
Ian Cribbs is Vice President of Banking and Business Services for OneAZ Credit Union. OneAZ offers a full suite of business banking solutions for Arizonans, ranging from checking and savings to credit cards and loans. They work with over 7,000 businesses of all sizes in Arizona and are committed to supporting the local economy. Learn more at OneAZcu.com/Business.