Even though Chase Bank shut down its $250,000 line of credit for Randy Lujan’s general contracting firm, Sonoran Bank thought it was worth the credit risk.

IFCM Inc. used the line about a once a year. It served more as a safety net than a funding mechanism for the bonding company. That’s why Lujan was surprised to see it had been removed when he checked his account online more than a year ago.

The bank told him since he didn’t use it, they chose not to renew it, eliminating some exposure.

“After that happened, it left a bad taste in my mouth,” said the president and CEO of the Gilbert company.

So he called a friend on Sonoran’s board of directors, and within weeks the line was granted and bumped to $400,000.

Lujan had a profitable company, good cash reserves, liquidity and excellent credit, but his trends were down even with a good pipeline of business from bank construction — ironically, mostly from Chase and Bank of America.

GOOD CREDIT RISK
The credit line is partially cash secured through a CD, creating no risk to Sonoran on that portion.

“He was a good credit risk for us,” said Frank Coumidas, senior vice president of lending at Sonoran Bank. “There’s not a lot of businesses right now that can say they’re trending up.”

IFCM used the credit line numerous times last year because business picked up as big banks received money through the federal Troubled Asset Relief Program. Without that line, Lujan said he would have needed to secure another loan.

Before the downturn, landing a commercial loan would never make headlines. But, given the credit crunch and this market’s reliance on financing, getting the green light for a loan is no small feat.

I/o Data Centers LLC, which designs and builds storage capacity for some of the world’s largest corporations, is well-capitalized and growing. But the company recently needed a loan for additional capital and infrastructure enhancements.

Executives began shopping a year ago for a debt provider and quickly were courted by financial firms, said Parker Lapp, chief corporate development officer of the Tempe company.

Mutual of Omaha prevailed, offering a competitively priced, long-term loan.

Kevin Hollarand, Mutual of Omaha’s head of commercial and real estate lending, said his bank looks at the individual seeking the loan, the company’s cash flow, collateral, and the overall conditions of the business and industry.

“We’re able to structure deals that correlate with the company’s cash flow,” Hollarand said. “A lot of banks aren’t even able to sit down with a client because they’re having capital or regulatory issues.”

Last year, Mutual of Omaha loaned more than $200 million in Arizona.

ESTABLISHED BUSINESS
Dean Rennell, head of Arizona business banking at Wells Fargo Bank, wants his team to identify the top 10 companies in each industry and seek their business. Each business banker is expected to make three face-to-face calls on prospects every week.

Rennell collects financial information from each potential borrower and links it to the size and type of loan request. He favors companies with established work contracts or specialized business lines.

That’s one of the reasons the San Francisco-based bank was attracted to American Metals Co., which processes, buys and sells scrap aluminum, brass, copper and other metals.

The Mesa company wanted to purchase a portable shredder, an $850,000 machine that breaks down scrap metal, which would allow AMI to sell the pieces directly to steel mills and consumers.

Finding financing was not easy.

President Irwin Sheinbein spoke to three other banks, which examined his records with a “magnifying glass” and “fine-toothed comb.”

“Getting the type of loan I wanted was frustrating,” he said. “As a small-business owner trying to grow my business, it was extremely challenging.”

After lengthy negotiations, Wells financed about 80 percent of the cost.

Sheinbein said the machine will bring in more revenue, while cutting freight costs in half by reducing the size of scrap. Although he secured a loan, he wants the banking community to be more sympathetic to the needs of small businesses.

“The economy depends a tremendous amount on small businesses such as ours,” he said.

Get Connected
American Metals Co.: www.americanmetalsco.com

IFCM Inc.: www.ifcminc.com