Trends in business lending: What’s in store for 2018?
It is an exciting time to be living in the “Biggest Little City in the World,” especially if you are a business owner.
With some of the larger companies like Apple and Tesla investing in Northern Nevada, our community is filled with optimism. As a lender, we are seeing several trends accompanying this positive view of the economy.
In the past year, we’ve seen many businesses taking advantage of low rates, moving from leasing space to buying it, or upgrading existing space in anticipation of business expansion. With interest rates expected to rise in 2018, we are seeing companies that were taking their time looking at various buildings now focusing on acquiring real estate and making tenant improvements to suit their individual business needs.
In addition to adding space, we’re seeing companies using money to update software systems and fulfill other technological needs.
The focus is to become more efficient and provide a better client experience, as they compete with some of the larger national companies vying for the consumer’s share of wallet, but with a more local, personalized twist.
Manufacturing is also benefiting from the economic boom. Several of our local clients have been purchasing or refurbishing equipment, or purchasing new vehicles. Leases are very popular in this space. For business owners who know they are making purchases over a period of months, we can get them approved for the full amount through a master lease line of credit. As they make a purchase, they submit the invoice, at which time that portion of the line turns into a term loan for that piece of equipment. That way, they don’t have to go through the process and hassle of reapplying each time.
SBA loans continue to be very popular, especially as Northern Nevada is seeing several franchise businesses move into our market, such as Dutch Bros. Coffee and Dunkin Donuts. Many businesses are moving into the area or are being established by first-time business owners.
The SBA offers many popular programs to help first-time business owners, and SBA loans generally offer longer terms and require less money down, which helps preserve cash flow for companies of all sizes. For this reason, many established businesses are taking advantage of SBA programs right now to purchase buildings.
With the announcement of the new federal tax laws, especially the tax reform bill, several clients have told us they are looking to increase their staff within the next year. In the past, they could not afford to add new employees. This not only benefits the business, but is great economically for Reno, and draws top talent to our state. Other clients have been inquiring about how to start 401(k) plans for their existing employees. They may be starting to think about planning for their own retirement as well, asking how to start that process after so many years of putting all their revenue back into their company.
We’ve also seen that some businesses are expanding their reach into new markets. Nevada State Bank recently helped one of our clients, On Command Dog Boarding, Grooming and Daycare, owned by Barry and Tracey O’Dea, open their second location in south Reno. They were at full capacity at their current location in Sparks, and had several customers coming from south Reno. They had the opportunity to purchase a building that used to house a restaurant, and with some tenant improvements, opened for business this January.
These upward trends were noted last year in Nevada State Bank’s Small Business Survey. When small business owners from throughout Nevada were asked if they were planning to apply for a loan, credit line or other type of financing over the next 12 months, nearly one-third of the respondents said “yes,” with nearly three-quarters feeling confident their business revenues or sales would increase during the same time period.
As we enter 2018, it’s rewarding to see us increasing our lending in so many areas.
Personally, I love Northern Nevada, and as other companies from surrounding states look to relocate or add another location here, we are becoming a premier place to work and live.
Jana Benton is a SVP, Business Banking North Sales Manager/Portfolio Manager at Nevada State Bank. She can be reached at email@example.com or 775-688-6981.
GasBuddy projects the national average gas price this Thanksgiving will be $2.56 per gallon, a penny higher than last year. The average per-gallon price in Nevada, meanwhile, is $3.30.