Is Your Bank About to Call Your Loan?

Corrigendum: This US Capital Partners blogpost is based on, among other sources, The Wall Street Journal article “Debate: Do Big Banks Lend Enough to Small Businesses?” (Dec. 13, 2011), featuring guest speakers Ami Kassar and Marc Bernstein.How to measure the risk of your bank calling your small-business loan, and what to do if you need refinancing.

According to a recent article in the Los Angeles Times, Bank of America is now demanding that some of its small-business customers pay off their credit line balances in full instead of making monthly payments. If customers are unable to pay off these balances on demand, they are being offered new repayment plans over as long as 5 years, but with far higher interest rates than before.

How to Know if Your Loan is About to be Called?

Unfortunately, your bank will generally not tell you your loan will be “called,” or not renewed, until right before it takes action. How do you know if your business is at risk? For a few easy steps to assess whether you are a likely candidate for loan termination at your bank, read our guide on financing.

A Few Reasons Why Banks Drop Small-Business Loans

Banks will pull loans for a number of reasons, but the most common are:

 • poor financial performance by your business

• your bank’s own credit problems

• to impress the bank regulators

According to the Los Angeles Times article, "Bank of America severing some small-business credit lines," the Bank of America began dropping small-business loans because of pressure to raise capital and cut risks, in the wake of another round of Federal Reserve bank stress tests. The Wall Street Journal reported also that Bank of America’s CEO, Brian Moynihan, has told federal regulators that if the bank’s financial problems deepen, it could start retreating from certain parts of the country.

What to Do If Your Business is at Risk

Marin McElhanyIf your small-business loan is at risk of being called, you should contact our team at US Capital Partners, LLC immediately. There are usually plenty of financing options available to a small business in your position. US Capital Partners will help you secure the financing your business needs, so that you don’t suddenly find yourself at risk if the bank terminates your loan. 

If you would like to know more about how your business can secure the funding it needs, contact our Vice President of Sales and Marketing, Marin McElhany at marin@uscapitalpartners.net or call (415) 889-1010.

Occupy Wall Street: Its Impact on Banks and Credit Unions

Occupy Wall Street (OWS)Ever since Occupy Wall Street began life last September in Manhattan’s Zuccotti Park, it has sought to spark a national debate on our economic system and the way its spoils are divided. As an investment banker and small business lender, I am often asked about the movement and its impact on banks and credit unions. Here are my thoughts on some of the questions I get asked most often:

  

Has anything changed since Occupy Wall Street first began?

Smaller banks and commercial finance groups are starting to speak up about bad service and unfair competition from the bailed-out (“too-big-to-fail”) banks and about how inefficient they are. Also, I believe the reversal on debit card fees is a direct result of Occupy Wall Street, which helped fuel the consumer backlash. The protests and media coverage certainly amplified concerns and heightened the conversation. It’s a claimable victory for Occupy Wall Street.

Have smaller community banks and credit unions benefited through customers moving their money out of the large Wall Street banks?

 
Smaller banks may have benefited in increased deposit relationships at the beginning.

Have bank customers become more polarized?

 
Absolutely. Occupy Wall Street needs a bit more direction and few bullet point issues to rally around. In the early stages, the movement was driven by a general feeling of malaise, but as time goes by there will likely be a rallying around a few key issues. This is when the movement will really gain momentum. Whoever strikes the note will emerge as a thought leader in the space.

Have lawmakers listened, and if so, what are they saying in an election year?

 
Nothing. They are still clueless and afraid.

In this instance, is social media’s bark bigger than its bite?

 
I don’t think so. Wait for the weather to get better in spring and summer of 2012. The movement will explode, and social media will prove to be a potent rallying force in its support.

Keep in touch with the team at US Capital Partners: Tweet us at @smallbizlending and share your thoughts on Occupy Wall Street (OWS).

US Capital Partners Attend ACG Conference in San Francisco

US Capital Partners team members Ish Spencer, Marin McElhany and Charles Towle were all in attendance at this week's ACG Conference held in San Francisco's Palace Hotel. The 2012 West Coast Corporate Growth Conference features a lively variety of keynote speakers including the lead singer of the band KISS, Gene Simmons and Vice-President of Cisco Internet Business Solutions Group, Rick Hutley. 

The San Francisco chapter of the Association for Corporate Growth was recognized last year as the best mid-sized chapter in the ACG organization.

As part of Northern California's premiere middle market event the conference theme was Driving Growth through Innovation and such panel topics included "After the Deal Closes: The Good, The Bad and the Ugly - War Stories."

Stay connected with the team after the conference: Follow us on Twitter and Connect with us on LinkedIn

Leveling the Playing Field

Recently, The New York Times published an article entitled “The Fattest or the Fittest?” The topic, which seems to be gaining increasing limelight in Washington, is the elimination of the significant benefits reaped by gargantuan banking institutions—like Bank of America and Wells Fargo—that are too powerful and interconnected to fail.

Big banks that are not allowed to fail receive implicit subsidies, especially in the form of lower borrowing costs, as a result of investor belief that taxpayers will rescue them. Senator Sherrod Brown, the Ohio Democrat who leads the Senate Banking subcommittee on financial institutions and consumer protection, has been strongly advocating that the government needs to stop placing these “megabanks” at an unfair advantage over their smaller competitors.

At US Capital Partners, we welcome a leveling of the playing field. What the big banks should do is provide more and better leverage for the small asset-based lending shops instead of completing with them for $1–3 million factoring lines, which these large banks don’t do well anyway. Nothing is more annoying than a gigantic bank recently bailed out by taxpayers competing in our small business lending space for a $500 thousand deal.

All too often, the big banks move into areas of lending in which they are simply not adept. They are able to put undue competitive pressure on smaller lenders, sometimes taking them out of business, largely through the unfair advantage they gain from an uneven playing field. In the words of Richard W. Fisher, the president of the Federal Reserve Bank of Dallas, the current regulatory ethic “coddles survival of the fattest rather than promoting survival of the fittest.”

Happy Holidays from US Capital Partners

Reflecting on US Capital Partners’ stellar performance this year, we are deeply grateful to everyone who has contributed to make this possible. This includes our outstanding lending partners, our dedicated staff, our superb brokers and affiliates, and the many inspiring small businesses we have had the pleasure to advise and finance over the course of the year.

This year, we have had the opportunity to meet incredible small business owners, CEOs, and CFOs who have shown immense courage, creativity, and foresight in the face of challenging economic times. Small businesses are the backbone of the US economy, and we are privileged to have been part of so many success stories.

Winner of our Happy Holidays iPad 2 Gift

We are thankful also for the many new contacts we made this year. As a small token of our appreciation, we have decided to give away a brand new iPad 2 to one of the contacts we made over the last three months. This year’s winner of the iPad 2, we are delighted to announce, is Samantha Foster from Umpqua Bank. Her name was picked out of a hat by Jeffrey Sweeney, CEO at US Capital Partners. Congratulations, Samantha!

We would like to take this opportunity to wish each of you health and happiness this Holiday Season and prosperity in the New Year. We look forward to working with you in 2012.

All the best to you and your family,
The US Capital Partners Team