Industry and Local Trends

Trends in Charlotte Business Lending

How collaborative partnerships are fostering growth in a booming region

Charlotte skyline for “Trends in Charlotte Business Lending”

The thriving economy in Charlotte, N.C., is creating new opportunities for businesses in the area. However, transforming those opportunities into sustainable growth requires planning and expertise, both inside your business and from your lender. In this Q-and-A, SunTrust’s Charlotte Region President John Reid talks about how taking a new approach to borrowing is essential to smart growth, how Charlotte-based businesses are fueling expansion and how to make sure you get the right lending solution for your business.

Q: What are the major economic trends you see in the Charlotte region today?  

A: Charlotte is a healthy, thriving economy. It’s growing and becoming more diverse. Traditionally, the biggest employers in our region have been the hospitals and the banks, which continue to be very large employers. And yet we’re also seeing more diversity in our economy. Service businesses and energy companies are growing, and even manufacturing businesses are seeing revitalization. Some businesses are moving their headquarters here, all of which makes it a great place to work and live.

Q: How do those trends affect businesses in the area that are looking to expand?

A: Companies may start considering new factors as they look to deliver growth. From an organic perspective, they may take on a new market or develop a new product. Or, they could be looking at acquisitions. Either way, they need to understand where they’re going and how they can get there.

A key element of any long-range business plan is a capital strategy. Having a banking partner that thinks about the company’s longer-term goals and offers proactive solutions to reach them will help the business execute on that strategy. If companies are having that sort of dialogue and they know what capital is available to them, they can more confidently execute their strategy.

Q: What questions should business leaders ask themselves as they prepare to seek financing?

A: Any time someone is leveraging their business or taking on debt, whether for a complex transaction for an acquisition or for a Small Business Administration (SBA) loan on the smaller end of the market, there is risk. Therefore, it’s crucial that clients have a firm grasp on their strategy and plan. Modeling and forecasting are important. They should ask: How do I think the business is going to perform? If we do this, what will change? Is this debt or acquisition ultimately going to enhance the value of the business? Or, is it going to put too much risk on my business? If that’s the case, they might want to modify or re-think the decision.   

Q: What role do banking partners play in executing on long-term plans?

A: Traditional commercial banking has often been a reactive order-taking proposition, with bankers going out to businesses and seeing if they could make a loan or take some deposits. Now, we’re working with a new model, one that’s more proactive. We ask ourselves, ‘How do we have more of a strategic dialogue around what they are trying to accomplish?’ Our purpose at SunTrust is to light the way to financial well-being and help clients achieve smart growth. That starts with having a conversation with business owners about their plans, their goals, their needs and then providing proactive advice.

We also engage with business leaders on the questions I just listed. For example, acquisitions carry integration risk, so we would ask about the expected cash flow relative to the debt the business is going to take on to make the acquisition.

Q: Can you give us an example of how that conversation works?

A: We recently worked with a large middle-market company here in Charlotte that was on its second and third generations of ownership and management. The leaders had great growth aspirations, both organic and inorganic. We talked about how they’d achieve those aspirations from a financing perspective. Previously, they would buy a piece of land to build a new location, get a loan on that piece of land, and then move on.

We asked about how they planned to grow over the next five to 10 years. From there, we asked ourselves what kind of credit we could provide that would allow them to achieve that growth without having to finance one piece of property at a time. We showed them all their options, everything from continuing the way they’d been financing growth to a credit facility that would allow for maximum growth.

We brought our one-team approach to that conversation. That is, we organized a team that included our corporate finance specialist, our industry specialist and our risk partners so that we could have a truly strategic conversation.

Q: What can a one-team approach offer a company looking for financing?

A: Not all growth is smart growth. A business might be looking at strategies or contemplating a capital structure that is too aggressive or too leveraged. By bringing industry and banking expertise to the table, we can help them with smart growth. For example, on the banking side, if a client is making an acquisition, having financing in place is important to closing that deal. So, we have a dedicated transaction execution team that works closely with the local relationship manager, which gives the borrower a smoother experience.

On the industry side, for example, aging services is currently a booming industry. Given the demographics of the country, and certainly the Southeast, a lot of companies are building more independent living units and upgrading health centers. Having an industry specialist allows us to share with clients what we’re seeing others in their same industry do, and to offer best practices and customized financing ideas that support the company’s long-range plan.   

Q: What do you recommend a company seeking expansion look for in a banking partner?

A: Banking is really about relationships. The best relationship is one where both sides can really get to know each other. That way, we can understand what they’re trying to accomplish, and we can help them see the pros and cons of how to get there and give them the right solution. We try to really understand the needs of our clients before we start offering solutions.

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