TAMPA, FLA. (Feb. 27, 12:15 p.m. ET) — Loans could be hard to get during the Great Recession, but now lenders are freeing up capital, an official of EverBank Commercial Finance Inc. said at the Plastics News Executive Forum.
Strong banks have taken over ones that failed, and the financial sector has cleaned up its balance sheet, said Samuel Smith III, managing director of plastics and packaging.
“”Banks and financial institutions understand that, in order to grow, they need to put on assets, which means they need to make loans,” Smith said. “They stalled on making loans during the tough period. and with the healthier balance sheet, healthier portfolio, they're looking to grow. Certainly our bank is looking to grow, and most of our competition is as well.”
Smith, who has 28 years of experience in equipment financing, thinks access to capital will continue to ease this year. Pent-up demand after the recession has driven much of the manufacturing investment in new plants and equipment, he said.
EverBank's plastics and packaging business unit is in Hampton, N.H.
Smith reviewed how the recession and home foreclosures led to a huge pullback in credit. Now the economy is recovering, although unemployment remains high and business leaders remain unsure of the country's direction, he said.
“I think the presidential election causes certain decisions to be stalled. There's uncertainty that exists in both the political and business climate,” Smith said.
With historically low interest rates, “it continues to be a great time to consider refinancing or term financing, fixed-rated financing, if it makes sense for your firm,” he told Executive Forum attendees.
He recommended processors consider non-traditional sources of lending. You often can obtain financing using molds for proprietary products as collateral. You can finance so-called progress payments made on equipment under construction. Sale/lease-back can make sense for refinancing debt.
Even though credit is easier to get, Smith said it's important to be well prepared.
“All of us went through difficult times. The banks went through difficult times and so did the customers. What we believe is really important, is addressing whatever those red flags or those irregularities that occurred in the company, and the trends. Addressing them in a positive manner, as if you've taken charge, you understand the problem. You know why it was an issue, and here's what you've done to address it.”