It's essential to develop strong relationships with commercial lending officers, said David Capodanno, a certified public accountant at EisnerAmper. He said one big-bank commercial lender handles a half-dozen of his clients: "I meet with him four or five times a year, I keep a list of the clients we are working with together, and we talk about what is going on. All of my clients know that I know the bankers — it's a good relationship."
Capodanno said at any given time, a bank might want to lend more to certain sectors and avoid others, and he steers clients to bankers who want their business. One of his clients owns catering halls and diners, and "Some banks shy away from (food service) because the margins are tight, and there aren't a lot of assets to put their hands on" if the loan goes sour. This business deals with a community bank that has known the business for a long time, understands it, and is comfortable with lending to the industry.
Another client, a perfume distributor, wanted to get into asset-based lending; Capodanno knew that one of the largest banks in the state wanted to expand its asset-based lending portfolio. He arranged a meeting, and the bank agreed to provide $22 million in financing.
Richard Reisenauer, senior vice president and director of middle market lending at Provident Bank, encourages businesses to bring their CPAs along when they meet with bankers.
"Some transactions are complex, and sometimes it's difficult for the business owner to explain them in the detail the bank would like to have," he said. "What banks like to know is where the company has been, where it is now and where it's going — and to have the financial numbers to go along with that, so we can see the trends."
Lenford Robins, chief executive of RRML Capital Resources, a lender and loan broker in Fort Lee, said even a business with perfect credit may get turned down.
"You have to know (which bank) is doing what — that is the real secret to obtaining capital," he said. For example, a company trying to buy commercial property as an investment will get rejected "if the bank does not want to carry investment property in their portfolio," Robins said. "If you want a loan for a hotel, you'll be turned down by banks that don't do hotels."
Often, a business wants more money than the bank is comfortable lending. Robins said one of his clients wanted to borrow $1 million, but the bank would only go up to $800,000; the business decided it could manage with $800,000.
Bob Doherty is New Jersey state president of Bank of America, and senior credit products manager for all the bank's commercial operations in the state. He said CPAs typically will "provide involvement that will add color to the relationship … and really help us understand the client and their needs better."
He said the bank looks for ways to get a transaction done, and when a loan request is turned down "It could be problems with the cash flow, or the collateral they are putting up, or problems with their historical financial statements."
While some business advisers said big banks prefer making large loans, and are less interested in dealing with smaller firms, those lenders insist they are prepared to serve the entire market.
Doherty said Bank of America has teams dedicated to big companies, and others that focus on small business. The bank said it has hired 30 small-business bankers across New Jersey in recent months. "There is not a slice of the New Jersey market that we are not actively seeking to bring in as clients," he said.
"The banks are definitely doing their due diligence — going on the Internet and seeing what they can find out about the company," said Elliot H. Koplitz, a partner in the Hunter Group CPA firm, in Fair Lawn. "The owners better lock their Facebook pages for anything they don't want seen — you have to be very careful of what you put on social media these days if you are going for financing."
Koplitz said one of his clients is a service business with 50 employees that is poised for a growth spurt, and needs to borrow between $3 million and $4 million to finance that growth. A medium-sized bank would only agree to lend $1.5 million, but the banker referred Koplitz to a small community bank. "I have a relationship with this banker, and he said, 'Look, I can't get accomplished what you are looking for, but here is a buddy of mine who works for another bank. I've talked to him about the deal, and he says he can get it done.' "
Koplitz said the deal is attractive to the small bank, because it has a lot of commercial real estate-based loans on its books, and want to diversify. He said the loan will be secured by accounts receivable, cash and investments.
The first bank "was not comfortable because of the size of the loan and because we're not delivering a product, we're delivering a service. All the banks have their pet peeves about what type of business they like to lend to."
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