Banks that learn an entrepreneur's business model and lending needs are a rare breed in Los Angeles. The CEO of Banc of California, Steve Sugarman, told me during an interview that the recent credit crisis changed the banking industry in Southern California.
Traditional Lending's Disadvantages
"Small business owners had access to about a dozen regional banks with assets between 5 billion dollars and 20 billion dollars and those are gone."
He said a lack of lending impedes the economic recovery regionally and in the state.
"The credit crisis impacted the finances of all businesses. Banks who take a formulaic view of credit force companies who had previously struggled to work hard for 3 to 5 years to get clean and that means a lot of businesses have been shut out from loans. Traditional financing has shut them out."
Flexible Capital's Advantages
Wells Fargo provides more small business loans than any institution in California, but Steve said a bank that's capitalized with more than 20 billion dollars is too large to provide personalized services.
"Banc of California is the largest national bank in California under 10 billion dollars. A [personalized approach] provides a more vibrant banking environment in Southern California. Banks are able to look at the individual characteristics of a business and where it stands today instead of a stiff rubric."
Niche Service Market
Banc of California operates three channels of business that serve small business owners, entrepreneurs, and the family office in Southern California:
- The company's community bank has 15 branches in Los Angeles County, Orange County, and San Diego County
- The commercial bank is non-retail and goes in-depth into a business owner's needs
- The private bank provides a business owner and family office owner with the most personalized banking needs
"You want a business relationship with a banker who will take time to understand your business needs for not just today but for the next few years. As you deliver on your business plan, the bank should be available to finance growth and expansion."
A relationship based on understanding, says Steve, is the one most like to meet the needs of entrepreneurs and will strengthen Southern California's economy.
Click here for the Banc of California website for further reading.