Small business series: How to apply for and get a business loan

Good morning everybody and thank you for joining us on our webinar today and I want to welcome you to the webinar which is the latest in a series of webinars that we have brought to you co-hosted by ourselves and NJM Insurance Group. We've tried to bring to you topics that are very interesting to the small business market or the business market of New Jersey and today's topic which is securing a business loan probably is of particular interest to many of you because you know what we're trying to do in New Jersey is grow our economy and to grow our economy there needs to be access to capital for companies and the most traditional access to capital the most traditional capital for companies is usually a bank loan so that's why today's topic should be of particular interest. I want to thank the NJM Insurance Group for joining with us for the third year bringing these seminars these webinars to the business community they've been a great partner of ours they're a great corporate partner and a great corporate philanthropist in the state of New Jersey good people to have good people to work with and I want to thank them for all their support over the years. So this is going to be a pretty free-flowing webinar I'm going to ask the five distinguished bankers that we have to give a brief overview of who they are and where they're from and what they do and then we'll get into some questions and just have a dialogue that hopefully will give all of you some information on how you might approach banks for the need to borrow. So with us today we have George DeStafani from Ocean First, we have Andy Fernandez from Bank of America, we have Vito Giannola from Provident, we have George Marklin from Wells Fargo and Fabio Oliveira from Chase. So George DeStafani you want to kick it off? Hey thanks Tom good morning good to be here thanks for having me as you said I'm George DeStafani I'm the Chief Community Banking Officer for Ocean First Bank which is based in Red Bank in Tom's River. So we're about a $13 billion community bank 40 branches centered throughout New Jersey but we've got a presence from Baltimore to Boston. You know we've been around 120 some odd years and we're heavily involved in the business banking spaces just a great opportunity for us to have a chat so thanks Tom for having me good morning. Hey Andy. Hey good morning everyone Andy Fernandez Bank of America and I support space anywhere from $1 to $15 million revenue local businesses in the state of New Jersey and Tom that's it I'll keep it nice and short. Okay Vito. Good morning everyone and thanks for having us as well Vito Giannola Executive Vice President and Chief Banking Officer at Provident Bank. My responsibilities is overseeing small business banking and business development also different types of go-to-market strategies that involve community involvement investments and everything that touches that retail customer so under the umbrella also includes the 140 branch network that we have and I'm happy to be here today so thank you. George. Yeah thanks Tom good morning everybody my name is George Markman. I lead a team in central and southern New Jersey for the middle market for Wells Fargo. I've been with Wells for the last nine years and prior to that I spent about 10 years with Bank of America. Thanks Tom. Fabio. Good morning everyone Fabio Oliveira. Thank you for the opportunity to be here today. I've been with Chase for five years now. I'm a Senior Relationship Manager here operating within the space of $5 million to $25 million in revenues. I focus up and down Jersey mainly Middlesex and Mercer counties. I've been with Chase for five years in the financial industry over 20 and looking forward to today's discussion around how to apply for and get a business loan. Thank you all the participants for taking the time out of your day to be with us. Appreciate it. So let me start out with a very basic question. When I was in the banking business and lent money many years ago I was always driven by what they then called the five C's of credit which were character, capacity, collateral, capital, and conditions. Do those five criteria still matter today in lending because of the over-regulation that has been placed on banks? I would say so. This is Vito. Those five C's are truly a big part of what we do today when we're looking at credit but more specifically in the small business arena it's really a lot based on personal credit scores since we're lending to the individual but more importantly our relationship managers responsibility as we're bringing in loan applications and meeting with clients in our markets is really to spread the word and really put a good understanding of what the character is about, understanding the business. So truly the credit is a big part of it but everything else that surrounds that is a decision that we look into as well. Okay and Tom I'd echo that from George as well so that was funny preparing for this call I went into some of our training material for our new hires and the five C's of credit still exist so we start our calls as you probably remember you know it's weekly or monthly with talk to me first about character and then like Vito said kind of round out the rest of the story drill in on the credit drill in on the collateral the conditions and the cash flow and that sort of stuff so I think I think that still rings true. I just want to echo that we have actually walked away from deals because of character issues so it is still important that that's being looked at and that's something only factor but it is a factor in determining whether we're going to extend credit or not. George or Fabio? Yeah listen I think we're all here Tom because we're all passionate about the small business world right so when you say what do the five C's of credit still come into effect I'd say yeah but there's probably a couple more that got thrown on top of that right so I think we were engaged and we like entering the space this is a market where we think we can make an impact the regulatory environment makes it interesting for us where we have to kind of add some some things as the as the years have gone on but I think at the end of the day if you were to ask any one of us the idea would be find out how a way we can get those five C's of credit and a couple others that got thrown on top to make sure that we're providing capital I will say that character is huge it's not just about crediting cash flow and the other C's of a character and the RM one-on-one capability to tell the story on behalf of the client to an underwriter in some state or some town that doesn't know that business or the geography or the area that they're targeting it helps tremendously having an RM that knows the business that understands the business as well as a business tell their story their passion their vision all plays an intricate part in getting to a possible approval so with character still being an important factor I would assume that the networking opportunities in New Jersey for all of you and your lenders to get out and meet people and understand who they are and find out their reputation is something that you are really encouraging to all your lenders is that correct yes being active being visible in the market giving back to the community being in the community visiting your potential clients your potential competitors you know just being known in the community that plays a big part especially when we're able to leverage how you've given back and played a character in your community is all tremendous when you know preparing a not memo if you will to an underwriter about your history and what you've done the community and what you plan to do with for example the slot yeah I would like to add to a fabulous saying because we have the same model here but I would even add to that that you know not only having the relationship managers in the field understanding the businesses in the communities we serve we have a dedicated small business underwriting group just for small business lending which I think is very important so as we're constantly bringing in credits within our market the underwriting group and the relationship managers have a better understanding of the markets and what the needs are and then obviously the relationship management add that character piece that the underwriters don't see so I think the partnership between both groups is critical for us to like George said before give them our small businesses in the markets access to capital which is what we're here to do you know like anything else in banking time we the world has changed right you need how do you need to be everywhere for everybody right you have to have a delivery channel available for people when they need it so you got to go to where your customers are telling you that they're going so you know rms on the market is critical and important and I think we're all want to be on the market as much as we can I think that's very important but we also have to be available in other ways other channels right you know where digital experience what does that look like can we this we recognize business owners are busy right so it's 10 o'clock at night and they need information around uh or that's when they're available to start an application you need to have that that that technology available so like all of our other types of banking we're going to meet where the demands where customers are going and we're still coupling that traditional um being out in the market and have boots on the ground I don't think we ever get away from that so um question I would ask of all five of you is as companies come to you for loans what information would you ask them to bring to you so that you can begin to properly evaluate their requests oh I can I can jump in I think one way we usually start our meetings across the state the country is is to sit down with the business owner and anybody in finance and really get an understanding uh from their perspective as to how they see their business how it operates day-to-day truly get your arms around exactly what it is they're doing before you get to the the asks around the financial statements so you know oftentimes we want to take a look at how the company's done over the prior few years as you know kind of touched on an idea of what ownership looks like is always helpful and and also where they're going what what are they driving towards because I think that's how you can best be a consultant and a partner to help get them to where they see their ultimate vision go George regarding financial statements do you require audited statements or will you accept compilations yep great great question Tom it all depends on on the ask so usually for us at Wells if the ask uh in the sense of the loan size it's north of 10 million then we'll start getting into that that realm of audited financial statements under 10 million a compilation or review is great and often under 10 million you you may just have some internally prepared numbers depending on exactly where the ask lies how do you how do the rest of you uh deal with um compilations versus audits yeah we we follow the same flow that George does there's that criteria so really in the small business arena at Providence Bank is loans up to a million dollars and as you get more into middle markets and higher volume type businesses what it would be required um but you know just to spin off what George said before you know understanding the owner the character right when they're applying for the loan is important if it's just steady business and they're looking for working capital I think the conversation's more towards cash flow and what the needs are maybe treasury management services need to be um involved in the conversation but when it comes to maybe expanding the business I think it's real important that they come with a business plan that's basically explaining where did I start where am I today where am I looking to go which is the same thing kind of what George is saying that's very important for us to put together the story as we look at at the credit but in regards to the financials we follow the same type of uh and I'll echo that on Chase side uh usually starts asking for compiled or um reviewed financials once we start crossing that two million two and a half million exposure when we reach about that four or five million we started looking at maybe potential audited financials but it's also dependent on the type of if you're looking for a commercial mortgage and it's a 2.5 million dollar ask working order it might not need it or might be able to get away with it because you know the client was there it's a it's a solid foundation whereas a line it has a little bit more risk associated with it for example uh but you know to to um the point earlier is it's not just about financials it's you know when you meet with the clients it's high level overview of the what the why and the how what you do and how good you can explain it to us because we're your advocates here at the bank to our internal folks the the powers of approving the client for example how good you can tell us the picture how good we can absorb it how good we understand your industry and then put pen to paper to get that picture painted for our um so is there an appetite at all for um uh loans that are um limited from a collateral standpoint or does collateral still play a very important role in your lending decision Tom I can I can take that so it all depends on the loan um here at Bank of America we consider ourselves a cash flow lender so we really look at the cash flow and how the business is trending um that's not the only decision but uh typically uh if a client does not have collateral but the cash flow you know that that weighs heavily on our internal partners on whether we're going to okay anybody else also cash flow lender uh collateral does play a big part you know we want to make sure that we are collateralized on um on our own amount um if there is a potential shortfall in collateral you know we try to lean into maybe the SBA or one of the uh local communities CDCs our backs to to help us with the with the request but we do like to see the collateral there in terms of security yeah I would add to that as well that um you know cash flow lenders here CNI business is a big part of our business and um as we're looking at different credits because it definitely varies um a UCC filing would be something we would put on as a collateral where you kind of look at unsecured so we would need first lien on that so I wouldn't say that there's any product today that's completely unsecure with no UCC filing no collateral at all uh in the space that we're doing business with today so it sounds like um cash flow is a primary driver obviously to make sure that the cash flow is there to to pay the loan that's being requested but the strength of the cash flow would dictate um the collateral that you would uh try to go after and it would be kind of in direct proportion to the strength of cash flow versus the need for collateral does that sound right yeah that's okay so in that context um from the standpoint of cash flow startups startups have no cash flow they have projections so uh how do you deal with the uh very strong uh reliance on cash flow to evaluate a a company that is starting yeah Tom it's it's George Markman from Wells I would I would just start by telling you that with lease within Wells Fargo we've got different verticals and startups specific to tech that's a vertical inside of Wells Fargo that we're very focused on and and we want to be there to help those companies get going and then obviously grow through their life cycle uh with with the bank I think the lens just changes Tom in a drastic way you're going to really be reliant one on the story uh as we said but two on ownership that stand behind uh this startup company and um and we do a lot of that um mainly out of New York covering companies in New Jersey but um we actually absolutely have the resources to support companies like that so that's where the character factor kicks in about the experience of the uh the individuals uh in the business that they're trying to start up and that becomes a more prominent factor in the startup yep yep but we do a lot of it and to add to that your business plan how effective is it you know the tell your story tell your vision tell the future um why you want to get into this industry uh the business plan there makes uh plays an intricate part in the in the uh down the writing process and we would also look at obviously outside cash flow so your personal cash flow coming in uh from your double to paycheck if you will uh but business plans on the startup projections you know year year one month over month year two you know maybe a month over month or a full year you know balance sheet projections plays a big part on executive bio executive summary a resume plays a big part if you're coming in as a as a startup for for startup one yeah i would add to that as well again dependent on the industry the business that you're in the experience you have as the owner um we have different verticals as well that we focus on so sba may be an option we have a health care group that focuses on that industry so as we meet with the individual and see what their needs actually are including all the things we just heard from fabio and george in regards to projections and and the storyline and the experience and all will depend where or what alternative business line we could incorporate into the conversation okay tom what i would add it it also depends on the industry so just going back to what we talked about health care like i'll give you an example here bank of america we do tarps all the time for health care folks coming out of dental school to like store number out there up to five six hundred thousand dollars for other folks that are maybe not going into a specific field like that we do have solutions for them to help them grow their business so it all depends on the the field or the business that the the client is looking to go in there's options vito talked about uh the sba that's a that's a good option for for startup type businesses new jersey has the new jersey economic development authority to do a lot of good work around there and there's there's uh cdfi's that are uh helpful for some of these smaller micrograms you know the union county economic development the ucdc so if folks are out there looking for uh real guidance about how you can dig into some of that business plan that fabio talked about those those cdfi's actually listen if you just google new jersey cdfi's there's probably about 30 of them that are available in our community renaissance a couple of those folks so um you know for the newer businesses that are typically a little bit part of a finance there's there's some great tools out there especially new jersey to look through uh how you can make that happen yeah i think you know companies who are approaching you for loans many of them are probably not aware of the assistance that you get from the sba the eda cdfi so uh do you all have relationships with those uh other organizations so that you can help bring them in to help you shore up a potential credit we do and that's what we should be doing right when when folks coming in and we talk i think each of us talked a little bit about the importance of relationship and getting to know folks and getting to know the situations that's where i think the rubber hits the road right where you're really listening trying to work for solutions and then getting people connected with the right organizations to make sure that they they have a fair shot at it right that's that's where i think we all like when you think of that the overall if we're not able to provide the credit to a startup per se and we can get the right organization involved to support it and we could be there along the line with them getting their accounts you know potentially their insurance and things like that at least we tie them in early on and then ultimately take them to a conventional setting product um so i think it's a it's a win-win for everybody for us to stay engaged and support the small businesses even if we're not doing the credit up front okay so i'd like each of you to walk me through the approval process that you have at the bank from when a potential borrower comes and sits down with one of your relationship managers what is the process internally that you go through to approve the loan and how long does it take i'll start that off so um we have 34 market sales managers within our footprint that are focused on small business development um they're credit trained so they have the knowledge of really have an intelligent conversation with that small business owner to come in as we're looking at financials and uh getting ready to apply for the loan so our people are really coaching and mentoring the small businesses to kind of go through make sure everything is set the right way before we actually put the application in just keeping in mind when it gets to this dedicated small business underwriting group they're looking at the cash flows they're looking at the story we put them together and it's kind of hard to go back and forth and you can put everything in up front it just makes it a lot more seamless so our relationship managers have um an app a digital platform that they put the application through and i would say within 24 to 48 hours at max we're already getting a response if it's approved or not or we need additional information and we have everything run directly through uh the relationship manager today so they could be the point of person the point of contact to to run that application and make sure it gets done um you know simple fast and easy that's that's the need right access to capital the simple fast and easy process and i think that you know it's a differentiator for us here at the bank just having that group that's dedicated to those loans up to a million dollars that really i think puts us in in a good position as we're communicating with clients and going through the application process so we get the response from underwriting and then we get right back to the customer on next steps if there's more information needed i will say that if i go next and i will say that having a complete package tremendously versus piece mailing so you know ideally you'll meet with the rm or the banker you know step one you know kind of get an idea of what you're looking to do or accomplish once we put together a complete loan package if we're submitting it today we typically get a response within five to seven days uh turnaround on the chase side um depending on the complexity of the deal might be a little longer if it's a easier deal or um smoother transaction smoother deal might be a little faster but typically our turnaround time is five to seven days and then now once we get the approval from from the the underwriter you know go back to our client and discuss you know rate term etc and next steps what needs to be done in order to get this to the closing table from day one full package to actual decisioning is usually about a five to seven day turnaround um but thom and i just want to just add a different angle here what delays a loan decision um sometimes is uh the the underwriter may have questions and there's just a delay when working with the cpas and getting information so the the faster that that uh the client or the cpa whoever is handling their financials um uh response back to the questions or anything else that we need the the fast will know the answer but seven to ten days is typically what the response time around but um a lot of it also has to do um how fast the customer and the cpa um are responding to some of the questions that we have yeah tom i'd probably echo a lot of what fabio said probably our system is very very similar um you know we'll actually do what we call a two-minute memo tom so it's a one or two pager overview with all the bullet points on the ask on an overview obviously the business and anything else that might be helpful and then we come together rather quickly with our risk officer here at the bank at wells and we'll make a decision and then you know as fabio and andy stated kind of follow the course from there on uh legal documentation and getting that loan in place but i think uh five to seven business days is pretty reasonable and closing a new loan facility inside of a month is is is about right yeah it's about the uh i i i'm going to start with a typical banker answer tom it depends right you know i think that's how we could probably answer most of the questions this morning um in our business banking segment which we define it's very similar to veto you get a conditional approval this or conditional answer uh the minute you hit the submit button uh you get it and then the closing from there is really driven by what we're looking to uh you know we talked a little bit before about collateral from taking a piece of real estate obviously that adds a little bit of time it's ucc filing is um as we talked a little bit about that's that's certainly quicker uh but i think that's about right you know we get a conditional approval very quickly and then we work on the diligence documents from there uh you know typical app to close that again it depends but you can do it in 30 days with real estate 45 days something like that is there uh in any of your banks is there a dollar limit size above which it has to go to a uh a formal credit committee for approval or uh is everything done with a uh a concurrent system of uh officers comment as well as our threshold is three million so if the loan size is over three million it does have to go to credit committee obviously as it grows from there they can get more and more complicated with how high inside of the credit committee you need to be but three million is is our threshold where that begins under three million it's more a decision made by the line how often does the credit committee meet george uh we actually meet weekly so if we how about the rest of you i would i would just say on our side um in the small business world we do up to a million dollars which is the underwriter and the um uh relationship manager going back and forth with some policy gets approved and follows its course um obviously with some oversight as you get up to um you know three million five million seven million this it goes into commercial lending and uh in the commercial lending segment there's different sign-off requirements so that goes up to about seven and a half to ten million with local uh sign-off but then above that mark goes into credit committee and we meet weekly as well um and again it's based on overall exposure right which i'm sure is similar to everybody else so if you come in from a two million dollar request where your exposure with the bank is 10 million it's going to go to credit committee because they look at overall exposure but again we meet weekly and it's pretty pretty pretty quickly on uh getting the the response back on the chase side uh there is a credit scoring model um under 250 depending on creditworthiness industry time business etc might meet certain criteria for for a quick approval traditionally our loans over 500 000 go to formal underwriting uh the higher the exposure it goes through just different set of eyes you know if you cross that two million two and a half million might require a second set of eyes from an approval capacity but there isn't the formal credit committee where you know we bring the deals and it's reviewed amongst uh amongst let's say senior leaders for an approval or declaration but um it really depends on on exposure it depends on the credit deal depends on what type of credit if it's again mortgage it might be way differently than you know 2.5 million dollar line or 2.5 million dollar mortgage they're way differently because of the risk associated with it um but yeah it's really it's really dependent exposure in terms of credit committee at least to the best of my knowledge in the business bank space we don't have credit committee it's uh through our our underwriters and then his or her manager here at bra similar to wells who's here with three million dollars um we meet um before the deal is submitted and uh but i think that's a positive thing because then we can look at submitting again so or how we're going to tell the story to the underwriting team so um that's typical for the deals that we so um are there industries in new jersey that um you all prefer not to uh engage in or is is it basic basically based on the strength of the company in any industry and the people involved with those companies again the industry uh situation sometimes uh prevents your appetite for loans but are there industries that you shy away from well new jersey's jersey's tricky right with the legalization of cannabis that's a that's a uh that's one that it's legal in the state of new jersey but still um a class two narcotic and federally regulated right so that's a hard one for for us to jump in yet i think most banks are trying to formulate a policy around it some have already done it uh so that's there's never to say never there but uh that'll be something that involves uh as an industry that's bankable or financeable um you know probably in the immediate future in the next you know 6 to 12 months as we figure this out aren't national banks prohibited from dealing with cannabis they are but some still do tom right so there's a there's a calculated risk there um you know some of the state charter banks take that risk there but the the banks are absolutely uh and there's some there's some legislation out there that's working on the safe factors out there that's that's trying to address it on the national level um but it still makes it very complex on a local level here in new jersey anybody else have comment on industry i'd echo george's his comments um on cannabis and i'd probably build on it and saying one of the tough asks that has come up for me from time to time has been lending to businesses that then go out and lend that money yet again so um those will be those will be a challenge and tom as we discussed before everybody jumped on um in the real estate segment uh office has been tough wells fargo has got a rather sizable position in the office market uh especially in new jersey and at this time we're uh we're sort of pencils down on any new office loans uh from a mortgage perspective so that's one more so not too long ago uh there was a liquidity scare in banks deposit runoffs uh the signature bank is uh all that stuff that happened and there was a comment because of the deposit runoff the banks were reducing their appetite to lend is all that behind us and are all of you uh actively soliciting uh new borrowers today yeah i'll start that off absolutely um you know our conversations right now in all executive meetings is how do we keep moving the business forward um you know always a on core deposit growth i think that's everybody's focus on this phone today because as we bring in the relationships and the core deposits it allows us to have more liquidity to lend money out right so we're absolutely in the business to do business and looking to bring in more customers to the bank no i would agree with that we are aggressively we are lending we are we are doing loans day in day out you know we're not expecting to onboard a client especially in that 5 to 25 space that does not have a loan or a line that they're gonna want or need to bring over with the relationship um you know it's cash flow it's predatory collateral it's you know how good you can paint the story it's the relationship you built with that client or that prospect to win the relationship over um we are lending you know it's we just got to sit down and have a talk and see how we can get you from point a to point b even if it's not today you know we can paint a roadmap you know six months a year to get you into that vehicle but um yeah you know when they yeah same year bfa um it really has stopped us from going out to the community and talking to folks about access to capital so um we're still on the same course that we've been on for the last couple of years and small business business banking combined yeah same here tom we're out lending a group you know want to be out there in the markets and make sure that we're we're providing the the capital that's necessary you know listen there was a period of time last march where things got a little bit hanky in the banking space i think that's kind of we created some distance there in the review mirror and you know not that you're back to business as usual i think george brings up a good point now office real estate investment real estate some of those asset classes get a little bit harder but that's really driven by the credit more than the liquidity right some of the risks in that in that space yeah yeah same so what are uh based on your expensive histories in lending what are some of the more common mistakes that you see potential borrowers making when applying for a bank loan well i would give probably a similar answer a lot of people are thinking about that may not say is usually when you come to the bank when you when you need it most and that's probably when your financials are probably in the worst position um so i think sometimes like we were saying in the early on in this conversation is preparing yourself for the future having the conversation with your banker the relationship is very important so you could build for the future potentially what may happen down the bike whether it's 6 12 18 months down the line a working capital line of credit that's something that's important to you when we talk about cash flow um you know buying an unoccupied building as compared to renting so i think all those conversations would be um more effective with a small business owner coming in for a loan as they're planning it out but i think that typical joke you know joking and banking is they really people come to the bank when they really need it most and that's when the financials are at a place that may not warrant what they're looking for so it shows yeah spot on you're spot on i would add that you know get a good cpa firm let them know what your intentions are uh your cpa should also help navigate you with financials preparation you know they have also communications and ties with the local banks or the local bankers uh that is huge you know your cpa should know where you are and where you want to go and having that open line of communication with him or her is tremendous i've allowed that make sure your cpa knows where you want to go what your what your plans are for year one year two couple years out what your intentions are for your business i i just had to tell them that obviously transparency is king but i i think a lot of times business owners will get very focused on one particular aspect the easy one is is rate right just shopping rate and i think the the the point we're probably all trying to convey today is is it's uh it's a longer game than that it's not just about the interest rate for a given year or two year three year five year period uh it's more so finding the people because it's a piece of people business that you can work with that can help support your ultimate vision like bobby anybody else i think i'm going to say the same thing veto said just a little bit uh differently i think understanding the capitalization of the company i think what i've seen is that companies don't borrow enough or don't have enough capital in the company uh and that creates strain right so it may sound odd coming from a bankers right saying borrow more um or or try to qualify more but it's it's that's where you see the most risk and you know younger companies as they're as they're starting to grow as being undercapitalized not having the cash flow uh to sustain so i think applying for those lines uh to prepare for what you've got coming up i think is very important the planning out what you say 12 18 months something like that i think is uh is very important to make sure that you understand the capital on your cash flow so if if i heard everybody correctly that one of the primary things is for companies to go to their bank develop a relationship with a relationship manager talk about what they're going to do say that they you know they might want to do this in the future and make sure that they have a relationship with somebody so that when the need comes they don't have to reinvent the wheel they've already had that uh conversation about their needs they would know and so would the know what they were looking for and that would smooth the overall process as opposed to coming and starting from day one when the need is there uh which maybe is too late or something does that make sense i think i think you're right on and then just to add one more caveat to that having the conversation early on also allows us as the bank to help you prepare for that potential request on the line so it's not just okay when you're ready give me a call it's really having a good conversation about what the need will be and making sure that you are heading in the right direction with the company from the bank's perspective so george your comment about sometimes there's lack of capital in the bank i would assume that that's where guarantees kick in and people i think correct me if i'm wrong any of you but i would think that any small business probably should be prepared to provide personal guarantees and maybe support those guarantees with personal collateral does that make sense definitely in the small business segment tom without question yeah that you know that's that's so intertwined the business and the and the sponsors behind the business and the operators uh it's hard to it's hard to separate it you need the support from both uh so definitely in the small business side that's something people should be prepared for okay we just we look for the personal guarantee on the small business side as well um we there's a shortfall collateral we might look towards a personal residence or something with some available collateral to help offset or mitigate some of that shortfall uh but personal guarantee is something that we would require on our own and same thing here at bfa we do require um personal guarantee sometimes when the loans get bigger over 10 million dollars it's different deal structures but for general um we do require personal guarantee so all of you uh all of your banks um operate in several states how important is new jersey and the reason i asked that is that new jersey unfortunately is not ranked very highly from the standpoint of business friendliness and we are very over-regulated uh from a business standpoint is it easier for you to lend money in other states than new jersey i'll i'll kick that off that's right to veto um so we we're we're the oldest uh bank headquartered in the state of new jersey um and from you know our focus and our prime business is out of the state of new jersey so out of our 140 branch network we have five in pennsylvania and two in new york and the rest are in new jersey so we're constantly looking to build out the business here and all the verticals that we talked about earlier from sba to abl commercial real estate cni and all so our strategic plans and initiatives our tactics our community development is really focused on new jersey and lending to clients in new jersey with the support of new york and pennsylvania as we expand out and obviously we follow our customers so if it takes us to a different state um for one of our customers that they're doing business in that's headquartered in new jersey or in new york and pennsylvania we follow them as well but our plan is really around what we could do to develop and organically grow in the state of new jersey i'd add tom being a being a national bank in wells fargo that uh we're absolutely focused on new jersey uh wells fargo through the wachovia acquisition has always had a nice swap the market share throughout new jersey we're constantly looking to to add to that and um and and for wells fargo specifically i think one of our calling cards between our branch network and the commercial bank is lending to small businesses is really one of our focuses and something we've always done well historically and tom and we had two teams last year to our new jersey bankers business bankers so we are growing the business banking space um to your to your question tom you know i wouldn't necessarily say that getting a loan in idaho is easier than getting on new jersey uh we like to keep our lines of business the same through and through um it really just comes down you know to the black and white financials the business and how our character our business plan etc but we are going to say to new jersey we again added a couple teams last year growing the business banking space so we are aggressively in new jersey we're visible new jersey's a good market very similar 40 branches for for us uh and all but five of them are in new jersey but the question around the regulatory environment listen it's a tough tax environment in the state of new jersey uh and it's hard you know for the banks listen most of us were nationally regulated right so i don't know that it's necessarily hard in new jersey but for the businesses it certainly creates a level of difficulty and we've seen over the years people move plants to the southern part of the country or even west of the pennsylvania so we've seen businesses react to the environment in new jersey uh fortunately i don't know i don't have the exact last number time you probably do i think that slowed a bit uh but that's really where that's really where you see some difficulties not so much that's harder to lend it's that businesses it's it's a it's a bit of a tougher environment and there's there's opportunities to take advantage of um other other geographies yeah so we've had a few questions pop up in our chat box so i'm going to ask uh kevin friedlander to pose those questions to the panel kevin yeah thanks tom um so we have a woman-owned business with less than 250 000 of revenue who's also having some cash flow problems and her question is just um if if your business doesn't meet the bank's uh threshold for revenue like what kind of assistance can she get uh beyond uh you know what you can do so i don't know who would want to answer that one so it's a small business with cash flow issues but uh not meeting the bank's requirement for a loan 250 000 revenue well i think we talked a little bit about this before um about the connections that you have with some of the non-bank lenders right so can we connect that person to a cdfi or ec or or the eda or someone that we can help bridge that gap and get them over the hump um so i think there's definitely options out there and there's um uh there's there's agencies that we can connect to help to help uh to help resolve some of that yeah and i would also add to that because that's a very good point george on the support beyond the banking arm but we do loans from five thousand to a million in the small business sectors we're really focusing on those small businesses and we're not capped at what the revenue is it has the cash flow right so if the cash flows and they're in business more than two three years and they're looking for a 25 or 50 000 loan um you know we can definitely entertain us we're not we're not looking at uh just the revenue of the business yeah my history in new jersey by the way is the spdc's and all these organizations that make loans they're very good and again sometimes the banks can't do it because of regulatory restrictions but they can and and there's no penalty or no harm and and uh it's a very good adjunct to the traditional source of bank lending so i agree with everything you're saying about those organizations and i just want to add um sometimes uh some of the banks have national programs especially for minority-owned programs where there's a grant sort of given so even if you couldn't get the loan through traditional financing see there's any any in-house programs that you may qualify for someone's asking if we can get the uh emails of all the uh people on this uh call and i'm sure we could do that to get the contact information everyone another question is um are alcohol businesses in play such as breweries or importers so i guess the question is do you uh make loans to those type of businesses i would imagine at chase we actually have a wholesale beverage division which i'm happy to link that person with if they're interested uh but we do uh we do bank we do lend to real estate i'm sorry to uh alcohol alcohol beverage companies it also depends on i guess the type of request and what they're looking to do cash flow but we do bank and lend to those individuals yes yeah probably i'd echo that sentiment as well same idea we've got a beverage group just the same and work with a lot of the uh local brewers uh on up to the the major brands and everything between another question is we may have answered this um but uh what are the documents that applicants need to have ready to submit when applying for a loan i mean obviously i would start off by you know two years tax returns and depending on how complex it is could be up to three years depending on you know the finances what they look like year over year um and then if it's something specific to equipment the information on the equipment that we'll be financing um and if it's lines of credit for working capital what it's actually for accounts receivables accounts payable so kind of depends on what's needed but it definitely start off with the couple years of tax returns to to give us a better understanding of the financials and the cash flow anybody on the chase that we'd like to maybe see three years just we get a full three year historics on how the business has performed year over year uh it's also helpful to have a year to date balance sheet and pnl if possible a comparison statement for same period last year just really see how the business is pacing this year versus last year and how you're going to end standard ar aging uh that schedule just so we can understand your current obligations and uh an executed personal financial statement just so we can get a snapshot of the individual and guarantors um at that moment in time i agree another question is uh most businesses have a relationship with the bank uh but when you're looking for a loan is it good to stick with that bank or shop around so uh anyone have any thoughts on that well what i think i will say is go ahead i'm sorry no go ahead go ahead i will say is if you're banking with someone hopefully you have a relationship with that let's say relationship manager if you will they should be in front of you once every few months just uh you know get a pulse on the business uh but what i will add is that if you're not happy with that with that bank for example with that individual interview somebody else in that in that business interview a couple of banks these are potential people that are going to be part of your team for the next foreseeable future and if you want them to guide you through that that loan process you want to make sure it's somebody that that fits your culture that fits your vibes uh you want to be able to connect with them call them they answer they reply do as they say say as they do those are all things to keep in mind when you're shopping for a bank and i always say it goes beyond rate it goes to that relationship one-on-one component it's um somebody said earlier uh george i think it might have been you uh relationship management is key now you want to be able to connect with the borrower or the person the individual the banker have that relationship with them and other you can count on them to help guide you through that process but at the same time also uh understand you as a person and understand your business understand your industry those are all components that i think are effective when selecting a bank or a banker that meets your business needs yeah i would just build on that fabio and cabin and just say it's it's not the worst thing in the world i've had relationships that i've covered for the last 15 years and and i don't think there's any arm or foul and those business owners that i've worked with for a long time every year or two or three uh sitting down with another bank and just having a conversation just understanding what's out there it's getting a second opinion when you you go to the doctor i mean if your banker is doing the right job doing a good thing um i don't think much is going to be gained but it's never never a bad idea to have that conversation and i agree with that i mean a lot of what we talked about today was relationship management so if the bank is doing their job and in front of their customers they should be the first go-to person to have a conversation about a loan or a certain credit but it's also important to definitely if you're not comfortable with the banker you have like fabio said before don't be shy to go out there and meet with other banks i mean there's obviously a lot of opportunities out there but clearly i think overall the best deal you'll get when it comes to rate in terms of where you're banking where you have a relationship and just want to just add um the benefit to the client and when it comes to relationship building um especially for clients who already have an existing loan um when you're looking for future financing your bank already has your financials your bank has already reviewed um a lot of a lot of the statements that that we interview so the process is a lot easier so it always goes back to relationship and your existing bank should be providing that for you okay we have uh one last question and once again may have been covered a little bit but what typical obstacles do applicants face and how do they overcome them when applying for a loan i think the biggest obstacle outside of your startup it's how well do you know the industry you know big pitfall is kind of shifting industries last minute or if you're this then trying to get into this industry is how well do you understand that industry or your knowledge that you bring if it's an existing business been operating for a couple years it's that piecemeal you know understand what a full package is meet with your banker or banker meet with you and provide that full package one shot versus the tax return here you know here i think the biggest pitfalls if you can get everything consolidated picked up or compiled one shot it makes the the navigation process through or the loan process that much easier navigating through i hope that helps question the packages i would also add that your credit you know make sure you keep your credit score high that's a big part of what we do in small business lending when we talk about character and beyond the cash flow of businesses how credit worthy you are so that that's real important all right so one thing i would kind of take away from this multi-faceted conversation we had and i kind of go back to the fact that a lot of people think banks don't want to lend money that their job is to say no the reverse is absolutely the the truth because if you all don't lend money you're not going to make money so you have to understand from starters that lending money is a primary responsibility of the banks and that's what drives their earnings per share so don't ever think that banks are not interested in your business and that same context the developing of a relationship to me has always been the key and i would say that for anybody who is looking to develop a relationship you're meeting with the banker for the first time absolutely be prepared know what you're talking about know in detail everything about your company understand your financial statements understand what you want to do be prepared to have that kind of discussion with your banker and one thing i have always harped on and it's kind of getting relaxed too much over the last bunch of years is look professional dress like a professional act like a professional be confident and if you do that plus you're prepared to have a valid discussion on what your company's needs are i think you have paved the way for establishing a relationship that's going to benefit you and also the bank so those are some of the the words of wisdom i would give people based on a lot of years of experience i've had in banking and any of you would like to comment on what i just said tom you want to come back to banking listen i think you nailed it there's a reason we're on this call today it's because we're engaged in this segment and we want to be out there supporting the communities that we're in i think everybody on this call talked about expanding our teams in the last uh in the last year or so and i think everyone has plans to continue to do that that's a doubling down on the confidence and the importance that that we think of in terms of banking uh in the state of new jersey in particular with this group but uh it's absolutely a market that we're in and we are absolutely open for business and i think uh i think that's universally shared across most banks i think my comment overall would be that as a banker and you all are in the same category nothing makes you feel better in lending money to a company and watching that company succeed i mean it's it's the those are the memories that you like those are what you that's what you want to do and i think if you follow some of the advice given by these five gentlemen today you can develop that relationship and succeed and everybody's going to come out a winner so i really want to thank george andy vito george and fabio for participating today i hope what they've passed on to you on the in the audience will be helpful i want to thank njm insurance for being our sponsor for these many years we thank you for that relationship and i also want to uh talk about a couple of events that we have coming up that maybe would be i think would be very beneficial to all of you in the whole relationship and networking uh realm on the 14th of november we have a event with the african-american chamber at the pines manor in edison our third annual de and i trailblazer awards very well attended event a good opportunity to get to meet people from a networking standpoint on december the 4th at the uh hanover manor where we're supporting ry and jay in the second annual uh c-suite awards which probably was one of the most well attended awards uh ceremonies we've had in the state in many many years i think uh if you look on our website you'll see how popular that was and i would highly recommend you attend we also have for our uh our members uh december the 10th our holiday party at calandras in caldwell and calandras is an institution that is in a league of its own so please plan to participate there and most importantly next year on the 6th and 7th of february we're bringing back our walk to washington train trip which is the largest networking event in the country we are told uh it's going to be a huge event this year probably a thousand people plus we would highly recommend you look at our website and participate in that all these events will bring together uh companies bankers lawyers accountants and be very beneficial from a networking standpoint so again thank you to the five professional banker we've anchors on the panel today thank you for the participants and thank you to ngm insurance and i hope everybody has a great day thank you thanks everyone