Webster plumbs needs and comes out lending

Webster Bank Senior Vice President John Guy is director of business banking for Webster, which in both Westchester and Fairfield counties maintains 33 banking centers; 57 ATMs and a banking hub for each county. His undergraduate degree is in economics from the University of Pennsylvania and his MBA is from the University of Chicago. He answered a number of questions sent to him by the Fairfield County Business Journal via email regarding small-business banking. He can be reached at 203-271-7188.

What new specific programs or services is Webster providing to assist small-business financing and how are those efforts being received?

“The Webster Fast Track loan program allows us the capability to approve a loan up to $100,000 within one business day and fund it in as short as 24 hours of approval in so long as Webster Bank is provided with all of the required documentation and information necessary to render a credit decision and fund the loan or line of credit.

“We have been hearing positive reviews from both our bankers and customers on the simple two- page application and improved response time. We are also getting great response for our dedicated expertise in the medical and legal industry. This team of specialty bankers has also been recognized for its understanding of the changes in the medical field around the transition to electronic records and the changes brought on by the ”˜International Classification of Diseases 10”™ initiative to record and identify health conditions. The ICD 10 initiative will cause a five-fold increase in diagnosis codes to roughly 69,000 that doctors, hospitals and health insurance companies use to diagnose patients and bill for their services. Our expertise allows us to provide the financial solutions to enable these professionals to implement the new protocol.”

Is money available for small-business loans today? How much money is Webster typically providing to its small-business loan-seeking clients?

“Yes ”“ we are open and ready to lend. We grew our loan originations by 18 percent year over to over $325 million. Processed applications are up 6 percent year over year. We funded 14 percent more loans year over year, while our average loan size is up about 8 percent.”

Are there specific high-demand small-business arenas for which the loan process works well (easy approval)?

“We introduced the new loan review process that is enabling decisions on loans up to $100,000 ”“ Webster Fast Track. We expect to expand that limit up to $250,000 in 2016. In many cases we are also able to provide quicker approvals for existing customers regardless of the loan size because we know and understand their businesses. Overall we believe the process changes we are making will enable us to decision loan requests and fund approved transactions within 30 days.”

Is there a small-business sector or sectors that are less appealing to lenders and why might that be?

“Historically, banks and other lenders have had a harder time funding businesses whose customers tend to be episodic or highly discretionary. We do however have customers in many industries and pride ourselves on looking at even these more challenging industries on a customer-by-customer basis, leveraging specific industry knowledge that our bankers and underwriting partners possess. We also are leveraging lending programs like the Small Business Administration (SBA) which provide banks with government guarantees to help us minimize the risk and service a broader range of customers than we can using only conventional lending programs.”

Small businesses often rely on lines of credit to address needs. What is the line-of-credit environment like today compared with the height of the recession and where might it be headed?

“The environment or appetite for banks to do working capital loans has not changed much over this time period in my opinion. What has gotten better, however, is our ability to approve more of these requests because there has been a decided improvement in the financial profile of companies as the economy has improved. We also find that those business owners that demonstrated they have the knowledge and resources to manage through an economic downtown are proving to be better candidates for approvals even if their financials haven”™t been restored to their pre-recession levels.”

SBA loan programs include initiatives for general small-business, microloans, disaster relief and real estate and equipment. What does it mean to be a preferred Small Business Administration lender? Is there an advantage to using such a “preferred lender” for a small business seeking an SBA-backed loan?

“We are a top SBA lender in Connecticut. Being a preferred lender means our customers and prospects can receive faster approval times for their loan request than if they worked with a non-preferred lender. This is possible because as a preferred lender, the SBA has delegated the final credit decision and most servicing and liquidation authority and responsibility for SBA loans to Webster Bank. Webster and other lenders are considered for Preferred Lenders Program status based on their record with SBA, and must have demonstrated a proficiency in processing and servicing SBA-guaranteed loans.

“Most importantly, this means our customers can receive the full range of the SBA products as well as all of the other products and services that the bank provides from us. This enables us to blend the SBA program with our conventional offerings to provide the customer with the best mix of the two that meets their needs.”

It is known many small-business owners tap personal accounts to meet expenses and even to expand. What are the advantages of business-dedicated savings and checking accounts for small businesses?

“We certainly would advocate for businesses to set up dedicated accounts to separate their personal and business affairs. Their accountants most likely would insist to make their record keeping cleaner between business and personal expenses and revenues and would recommend the borrower discuss this concern with the accountant.”

Is it dangerous to mix personal and business expenses and do successful entrepreneurs do it? Is there any trend toward or away from the practice in the face of loan requirements?

“As noted above we would certainly advise against it, however, the borrower should discuss this with their accountant. Ultimately, we do want to see that the business is meeting all of its cash flow requirements, including servicing our debt from business driven sources.”

Loan rates can reflect macroeconomic trends. Do you foresee money becoming more expensive to borrow by year”™s end?

“With the likelihood of rate increases greater than they have been in a while, we will be more deliberate in trying to understand the ability of the business to absorb any increase and continue to effectively manage their cash flow to meet all of its obligations.”