Navigating Bank Lending Shifts: How Commercial Credit Group Sustains Reliability

Posted May 20, 2024

As banks withdraw from the equipment financing industry and adopt more restrictive lending practices, there are fewer options to secure the funding necessary to purchase equipment and grow your business. Changes in lending policies can have a significant impact on both prospective borrowers seeking loans and established business owners who have been long-standing customers at a bank.

In this post, we explain why banks move in and out of the equipment finance market and provide strategies to help mitigate the risks if your bank changes course.

3 Reasons Banks Pull Back

  1. Reduced Risk Tolerance

It has been over a year since Silicon Valley Bank failed. That failure was closely followed by the failures of Signature Bank and First Republic. After this, many banks started looking more critically at their overall lending strategies and the industries they serve. This led to the tightening of credit standards and caused some institutions to limit lending in certain industry segments.

The most recent Senior Loan Officer Opinion Survey on Bank Lending Practices reveals that some banks continue to tighten lending standards in 2024. Moreover, the survey indicates a widespread decrease in demand for commercial and industrial (C&I) loans across most bank segments. Banks continue to reduce risk and take a more conservative approach to capital management. 

  1. Growing Deposits Goal

In 2023, banks prioritized retaining existing deposits as well as acquiring new deposits, largely in response to spring bank collapses. Banks are more closely monitoring their loan-to-deposit ratio, a key metric to a bank’s financial health and stability as well as the capital management of their own balance sheets. As we move through 2024, the banking environment remains uncertain, with no guarantees for businesses seeking loans.

  1. Economic Uncertainty

While recession was a concern in 2023, it was ultimately averted. According to S& P U.S Bank Outlook 2024, inflation persists despite a slowdown in growth. As a result, the Federal Reserve has delayed anticipated interest rate cuts, which strain banks' balance sheets. Now the primary concern lies in how this scenario influences banks' cautiousness in lending. This impacts funding, liquidity, and the management of unrealized losses.

What Can Business Owners Do

  1. Align with Multiple Financial Partners

The age-old advice of not putting all your eggs in one basket should be applied to financial partnerships. While the banks may be utilized for deposits and money management, diversifying your financial providers for different business needs, including loans, could be a beneficial strategy that helps mitigate risk when your bank pulls back from lending.

  1. Maintain a Cash Cushion

Maintaining cash reserves equips your business to weather emergencies that may arise unexpectedly. With cash flow fluctuations potentially affecting any business, it’s wise to proactively take steps to manage finances. One strategy to consider is to factor your accounts receivable to ensure smoother cash flow.

  1. Open Communication with Lender

Transparency and trust are key to fostering strong relationships with your lenders. This means having open conversations about your financial status and business goals with a lender who understands your business, industry, and its challenges. 

We Are Lending

As others in the banking and lending industry retreat from equipment financing, Commercial Credit Group (CCG) is ready to provide financial solutions. Our reliability is rooted in our independence. We are not part of a bank or tied to a manufacturer. We are driven to provide solutions to our customers in the industries we serve. Key components of that structure include:

  1. Financial Support, Regardless of Economic Climate

In 2009 and 2020, amidst the Great Recession and the global spread of COVID-19 and widespread economic uncertainty, Commercial Credit Group continued lending without hesitation. While economic whirlwinds are inevitable, CCG operates without the constraints that may hinder other lenders during such periods, ensuring uninterrupted support for customers.

Paul Bottiglio, Senior Vice President & Chief Financial Officer of CCG, emphasizes this dedication, stating,

"CCG’s disciplined industry focus and equipment expertise allow us to be there for our customers regardless of the macro-economic backdrop."

  1. Industry Focused

We focus exclusively on the construction, transportation, manufacturing, and waste sectors. We maintain a consistent presence in these markets, with an unwavering commitment to helping companies in these industries grow. We are a traditional relationship lender. We understand your industry. We understand your equipment. We get to know our customers and provide customized, flexible solutions to meet your needs.

Let us help you. Protection Status