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Banks, Clients Learn to Be More Flexible

By Deborah Jeanne Sergeant

Tom Roman
Tom Roman

Who could have guessed in January 2020 how different the year would be? Financial institutions have certainly felt the effects of the pandemic with their commercial customers.

“It’s certainly been an unprecedented year,” said Tom Roman, commercial banking relationship manager at NBT Bank in Syracuse. “We’ve been more active than ever supporting our customers related to the pandemic.”

Roman said that keeping in touch with corporate customers has helped support those with loan needs for keeping their business going and for those whose businesses could profit considerably by increasing their scale or pivoting to a new line of business during the pandemic.

Internal changes in banking have also helped financial institutions meet customers’ needs.

“We have had an expanded use of e-signatures that allowed us to continue processing loans and official documents within the bank,” Roman said.

“We’ve seen some clients in our portfolio who have seized the opportunity, even if it wasn’t in their normal line of business. There have been some clients that have capitalized in increased demands.”

For example, companies making personal protective equipment, hand sanitizer and medical equipment have done well during the pandemic.

Financial institutions have also needed to change how they do business. Many have chosen to beef up their remote banking capabilities, for example.

“Remote deposit capture allows businesses to deposit checks from their desktop,” Roman said. “Fraud prevention services to help our clients mitigate risks when fraud became more prevalent.”

Rick Shirtz
Rick Shirtz

Richard Shirtz, regional president of the Central New York region for NBT, said that loan rates have come down because of the economy, making it “a good time for consumers and businesses” to obtain loans. “Mortgage demand all over the place is high, but a good amount of refinancing has taken place.”

He said that it’s all about staying in communication with commercial customers and how they’ll make it through the pandemic, whether that means a loan to make payroll, to gear up to meet increased demand or alter how they serve customers to continue operating through the pandemic.

“We’ve been able to witness creativity among our customers,” Roman said. “Entrepreneurs are survivors by nature and are creative. We’ve seen quite a bit of that, like restaurants working with their municipality to offer seating in their parking lot or expand seating in some way.”

‘Crazy time’

Kenneth P. Walsleben, professor of entrepreneurial practice and entrepreneurship and emerging enterprises at Syracuse University, called this a “crazy time” in the world of finance, but one in which financial institutions should do well since many businesses need financing for the changes caused by the pandemic.

It’s also a time when businesses may seek funding for different purposes than they have in previous years.

“Businesses might be seeking loans for cash flow purposes,” he said. “I’m sure many companies are not paying bills on time. I would imagine banks have been fairly busy with requests. The hard part for banks is trying to figure out who to lend it to. COVID has affected many kinds of businesses.”

Businesses can also seek alternative means of financing than they’ve considered in the past, such as invoice factoring, which is selling the rights to an invoice to a finance company and receiving a payment right away instead of waiting for the buyer to pay it.

Or a merchant credit card advance in a business to consumer environment.

“They’ll come in and look at what you historically swipe and say you’ll likely swipe $100,000 in a year and they’ll take it out of your future swipes to get paid,” Walsleben said.

If a company’s financials do not support a loan today, an asset-based lender allows companies to pledge assets against a loan.

“The lender will repossess the collateral if they can’t repay the loan,” Walslben said. “These are sometimes individual companies and others are arms of a bank.”

He added that purchase order funding can help companies that receive a large purchase order but need capital to supply the order. A Small Business Administration loan can also aid by banking that loan.