With the $700 government bailout under consideration last week, there was a lot of talk about a credit crunch. Proponents said the bailout would prevent the credit markets from seizing up, making it much more difficult for businesses to get financing.
Erik Doucette, a Citizens Bank vice president and director of business banking in Rhode Island and Connecticut, answered some questions about the situation.
PBN: Is the credit crunch as bad as it has been portrayed?
DOUCETTE: Generally speaking, liquidity is strained. At Citizens, however, it’s business as usual. We are lending and responding to the needs of customers with products and services that meet their needs.
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PBN: How has the financial industry’s troubles affected local lending?
DOUCETTE: Companies have been affected in different ways by the current environment. At Citizens, business is robust and we continue to have a strong appetite to lend to small businesses. Our commercial and small-business loan volumes continue to increase quarter over quarter and we have seen year-over-year loan volume growth of 15 percent in commercial loans and 8 percent to 10 percent in small-business lending.
PBN: What advice can you give businesses looking for loans?
DOUCETTE: The best advice is to establish strong relationships with people at your bank who are experts at working with small businesses. Citizens has business-banking officers dedicated to working one-on-one with small businesses to understand their business and meet their specific borrowing and deposit needs.
PBN: What do you look for in a company before a loan is approved? What will get them rejected?
DOUCETTE: We take a holistic look at the borrowing needs of the business customer considering questions such as: What is the business looking to borrow money for? For what will the business be using the money? What is the ability of the business and business owner to repay the loan? What type of collateral can the business offer for the loan? What is the business and business owner’s credit history? Any significant challenges in any of the above areas will have an impact on a borrower’s ability to obtain a loan.
PBN: What should a company do to prepare for a meeting with their bank about a loan?
DOUCETTE: Small business owners should speak with their bank to find out what basic information their bank will need to consider the loan and have everything ready for review along with a list of questions they may have about different loan programs that may be available to them.
Providence-based Citizens Financial Group Inc., a $164 billion commercial bank holding company with about 25,000 employees at 1,600 branches in 13 states and non-branch offices in about 40 states, is owned by the U.K.-based Royal Bank of Scotland Group plc. Additional information is available at citizensbank.com.
