Small Business Lending

NJ Small Business Guide

There appears to be solid, longer-lasting good news on the economic front in New Jersey, which has lagged behind much of the rest of the country in job creation.  In this article, New Jersey Business speaks with small business lenders who reveal the state is poised for a period of sustained economic recovery.

“The picture for small business has been improving,” says Robert Ravaschiere, senior vice president for lending at Investors Savings Bank, Short Hills, a full service commercial bank.

He adds, “A lot of uncertainty has been pushed out of the market and there are a lot of businesses that have survived and made it through some very tough years. A lot of smart business owners have shored up their balance sheets by taking the opportunity to pay off debt. There’s a lot of money sitting on the sidelines right now because people are not 100 percent sure we’ve turned the corner.”

Most entrepreneurs contacting Investors Savings are seeking lines of credit or term debt to buy new equipment or to purchase or refinance their mortgages. Investors has 130 branches and $18 billion in assets.

“We don’t have a Small Business Administration (SBA) department per se, but we do work with the agency’s 504 program, which allows a business owner to put down as little as 10 percent on a loan,” he says. The bank contributes 50 percent and the SBA puts forth the other 40 percent.

He stresses that the picture for small business is improving.

“We’re not throwing a party, but some of my accountant contacts have seen their clients shore things up with debt, while some weaker businesses have fallen by the wayside. The fittest are surviving,” he says.

Hector DaCosta, senior vice president of Fort Lee-based New Jersey Business Finance Corp., an SBA-licensed, certified development company, reports commercial real estate financing around the state has picked up.

“Clients are more interested in pursuing projects they may have put on hold, and sellers and buyers have come to agreement on prices,” DaCosta says.

“Rates are still very favorable for financing, which I think is an incentive for a lot of these business owners – to take advantage of these rates before they rise.”

He adds, “I’ve been in banking for 27 years and we work with banks every day. We are seeing clients looking for working capital financing. They’re hiring more people, and whereas before they may have been in a leased location, now they’re seeking to buy their buildings or relocate to a larger facility.”

For example, DaCosta cites an Edison-based second-generation family concern in the spice business that recently leased additional warehouse and office space. “Now, they’re looking to own that space as well,” he says.

“We’re the No. 1 provider [of SBA loans] in the state, and one of the primary drivers of our loan program is geared toward job creation,” DaCosta says, “I would say businesses, under our program, have created more jobs than they anticipated.”

“What I’m hearing from people in the field is similar to the findings of our recent survey … there is some optimism that’s going on,” says Jim Malcolm, small business strategy leader for the northeast region for Wells Fargo Bank.

“The concerns of many business owners seem to be beating the competition and becoming the best at what they do,” Malcolm says. “Before, their biggest concern was simple survival.”

Wells Fargo NE is getting a lot of requests for simple lines of credit for cash flow needs, but “we’re also getting financing requests for equipment upgrades, whether it’s a new truck or computer systems. That’s where our product demand has been.

“We offer specific credit vehicles,” Malcolm says. Products range from simple lines of credit to more complex products to upgrade equipment or get into a mortgage.

“We don’t have a one size-fits-all answer. We have the banker talk to the customer and cater what kind of loan we can offer based on the specific needs of the business. We want to make sure we get the whole story before we recommend one type of loan,” he explains.

In May, Wells Fargo launched a website for small business owners, “It’s a resource website for new and existing small business owners and it has information on all of the products we offer. We’re finding there is increased demand from people,” Malcolm says.

Based on what Malcolm and other bankers have found in their surveys and what they’re hearing on the street, they are optimistic. “We’re not going to have an explosion by any means, but the fact that more lending is going on is positive,” he concludes.

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