Commercial lenders: business as usual in Alaska.

• Author: West, Gail
• Position: FINANCE

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Despite the recent recession and t upheaval in the banking world, Alaska's commercial lenders are operating in a business-as-usual mode--ready and willing to lend to all good borrowers. The caveat, of course, is the term "good borrowers."

Asked what a good borrower would look like, lenders at First National Bank Alaska, Wells Fargo Alaska and Alaska Growth Capital all agreed. A good borrower is a business that meets the five Cs of credit: character (integrity), capacity (sufficient cash flow to service the obligation), capital (net worth), collateral (assets to secure the debt), and conditions (of the borrower and the overall economy).

"As Dan Cuddy defines our philosophy on lending," said Senior Vice President at FNBA Doug Longacre, "a viable business has to have three things: A good idea, good management and capital invested in the business. If you have those three things, you've likely got a good business."

The review process for a commercial loan is essentially the same as it's been for many years, said Longacre and Bond Stewart, Wells Fargo's business banking manager.

"Loan decisions depend upon the risk--whether it's acceptable to the lender or not," Stewart said.

"If we can figure out how the bank is going to be repaid and the other four Cs of credit are met, we'll likely be interested in making the loan," Longacre said. "That was the way it was 20 years ago, five years ago and it's still the same today."

LOANS FOR BUSINESSES

A commercial loan covers a myriad of business purposes, from business start-up to expansion, from equipment or inventory purchase to the buyout of a partner.

"Customers come to us needing working capital, money to do tenant improvements, finance construction or lease a property," Stewart said. "It's our business to understand their business well enough to match them with the right loan. We might use a Small Business Administration loan-guarantee program or we might put the loan into our own portfolio. We may provide a line of credit. It all depends on what fits our customer the best."

At Wells Fargo, commercial banking is split into two parts.

"There's no hard and fast rule," said Sam Mazzeo, Alaska commercial banking manager at Wells Fargo, "but in general, our business banking team often works with customers with less than $10 million or $20 million in annual gross revenue. Our commercial team works with customers that have annual revenue that exceeds $20 million."

Mazzeo said mergers...