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The idea that banks aren't lending right now is a myth. That's according to the "Banking on Credit" panel at the recent STAFDA convention in Phoenix, AZ. The panel was made up of lenders from American Chartered Bank, Wells Fargo and Associated Bank and a representative from the Federal Reserve Bank of Atlanta.
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I can already hear some of you laughing at this idea; after all, I've talked to several people who have had to jump through a whole new set of hoops just to maintain their credit lines. And these are people and companies who have excellent credit histories with their current lenders.
So why the contradiction?
John Weber, a senior lender with Associated Bank in Chicago, says it's not really a contradiction. Rather, the new hoops are more about having more information to base decisions on, not necessarily stopping loans from being made. "We have to make loans to survive and be viable," he says.
In fact, by providing more information to the banks, you can improve the likelihood of receiving loans even if you had a bad year in 2009, says Chuck Gitles, first vice president, American Chartered Bank in Chicago. "The key is to communicate," Gitles says. "Having open and honest communication with your bank, even about difficult things, puts the bank is a better position to help if something happens because you're not catching them off guard."
And don't be afraid of shopping around. "It doesn't surprise me if you talk to other banks," Gitles says. "You should be talking to other banks. Build a secondary relationship with another bank to protect yourself against a worst case scenario if your primary bank fails."
Panelists expect credit availability to improve for most sectors in 2011, albeit at a varied pace. The exception will be new construction, says Dean Rennell, regional president at Wells Fargo Bank in Phoenix. "It's a question of supply and demand," he says. "Existing inventory is already so high that it will remain difficult for new construction for probably 18 to 24 months yet."
Read more about communicating with your bank in this article: A Bank's Perspective – Why Communication Only Helps