Local Lenders Say ‘Yes’ to Business

YOUNGSTOWN, Ohio — This is a good time for small-business owners to apply for a loan or seek a larger line of credit.

“We see a lot of demand for new lines of credit, for working capital,” says Josh Toot, a vice president for business banking at Huntington Bank in Youngstown.

Banks, the largest credit union in the Mahoning Valley and the Mahoning Valley Economic Development Corp. sound almost as one.

“Business is good,” Toot reports. “Demand started picking up quickly in the fourth quarter and that’s continued into this quarter. With the low oil prices, our pipeline has more than doubled.”

Many of those loans in progress will be to manufacturers – machine shops, tool-and-die makers, aluminum extruders – medical practices and the technology sector, he adds.

“This is a good time to borrow,” says Mark Wenick, Mahoning Valley regional president for Talmer Bank and Trust. “We continue to have solid growth. We have a good mix, good diversity. … About a quarter of what we do is related to oil and gas.”

Adds Frank Hierro, Mahoning Valley regional president for the Home Savings and Loan Co., “Demand [for credit] has been good. Commercial real estate investment is on the upswing.”

Demand for credit at Home Savings has been driven by owners wanting to add to their plants, Hierro continues.

“They need more manufacturing space. They need more warehouse space. … Demand has been driven by a need for working capital. They have improved revenue numbers and they [are confident] about expanding.”

Hierro is confident about the growth Home Savings’ commercial lending division will achieve.

“Our portfolio will more than double,” he says. “Our pipeline is filling.”

One area Home Savings will increase is its presence is indirect auto lending. “Right now we have a small presence,” Hierro allows, “but we intend to grow quite a bit.”

The chief lending officer at Cortland Banks, Stan Feret, reports, “Core commercial lending growth has been 8%” as demand has increased in the hospitality, health-care and transportation industries.

The largest credit union in the region, Seven Seventeen, has been active in commercial real estate, last year funding construction of two hotels in Austintown in partnership with MVEDC, says Vice President Brett Carnahan, who heads its commercial division.

This year, Seven Seventeen is providing the mortgage for the terminal a trucking company bought and financing the construction of another hotel, Carnahan adds.

All have worked closely with MVEDC, they say, to arrange financing for projects that need help from the U.S. Small Business Administration or state of Ohio programs.

“In 2014, we had 54 loans closed,” says Mike Conway, MVEDC executive director, “that totaled $4,152,978.”

That’s 17 more than the 37 closed in 2013 when the agency helped to provide more than $5 million in financing but, he notes, “We’re working with more small businesses.”

The businesses helped in 2014 are a more diverse group that ranges from the manufacturer of corrugated cardboard pizza boxes to the owner of an aerobics studio, Conway says.

Conway expresses satisfaction in seeing demand from the shops that use 3-D printing, a reflection of the influence of America Makes in downtown Youngstown. “Obviously, we’re pleased to help them secure financing,” Conway says. “They’re using it to expand and grow.”

MVEDC works with 14 banks and Seven Seventeen, Conway relates.

Huntington, the most active SBA lender in the nation, has used the agency to make the most loans followed by First National Bank of Pennsylvania, then Farmers Bank in Canfield.

Most of the financing First National Bank has arranged is for businesses in western Pennsylvania where MVEDC’s territory includes Mercer, Lawrence and Beaver counties.

Cortland’s Feret and Seven Seventeen’s Carnahan remark on the growth of the trucking industry. “Their need for drivers is at an all-time high,” Feret says. Trucking companies seek loans to finance equipment.

“Lower fuel costs are helping their cash flow,” the chief lending officer at Cortland says, which translates to improved risk and provides trucking companies more stability. This allows them to retain and recruit drivers by offering “better benefit and better routes,” Feret says.

Few borrowers tell lenders they think they’ll hire more employees with the funds they seek.

“We’re seeing a little more hiring,” Huntington’s Toot says. “They’re still working leaner.”

That’s not the case in the health-care and hospitality industries, the bankers say.

“Hotels will be hiring,” Talmer’s Wenick says. “The new assisted-living homes need more workers.”

With the funds lent to manufacturers for the purchase of new equipment and machinery,” he continues. “The sense now is we’re recovering. … There are a lot of healthy businesses and we’re saying Yes a lot more than we’re saying No.”

Huntington’s Toot reports “a lot of demand over the 16 months [in the hospitality sector]. Restaurants were expanding but that’s died down a little. It’ll pick up.”

Home Savings is granting commercial real estate loans, Hierro says, to contractors building offices for professionals, especially medical practices where patients walk in and walk out, and for overnight accommodations in Boardman, Canfield and Austintown.

And Home Savings continues to lend to contractors building multifamily housing, he says.

Most credit extended is variable rate, the bankers say, although with speculation that the Fed Open Market Committee will soon raise interest rates, lenders increasingly hear inquiries about converting variable rate to fixed rate. Fixed-rate lending, though, is almost always for machinery and the purchase of real estate.

As the recovery continued and become stronger, the number of entrepreneurs approaching banks to launch a business has fallen, the bankers report.

Besides credit, banks offer cash-management or treasury management products.

With low interest rates, sweep accounts that allow a business to invest overnight are little used. Popular is remote-capture deposit, most say.

“It’s very popular and a huge time-saver,” Toot says.

Remote-deposit capture allows a business owner to photograph a check with his smartphone or PC, transmit the image to the bank and get same-day credit for the deposit.

“It’s our biggest [cash-management] growth,” says Eric Lanham, senior vice president of marketing at Seven Seventeen. “We had 20% growth every year over the last four years.”

And while most lenders offer software to detect and protect themselves against fraud, “I’m surprised [that customers] don’t use it,” says Huntington’s Toot.

“They don’t think it will happen to them.”

Copyright 2024 The Business Journal, Youngstown, Ohio.