Tank-trailer leasing companies say they have enough capital, despite tighter bank lending criteria under federal rules
Apr 1, 2010 12:00 PM, By Rick Weber
DESPITE tighter lending criteria, tank-trailer leasing companies say they have the capital to meet their needs.
Many banks adopted stricter lending criteria even though the federal government's Troubled Asset Relief Program (TARP) provided several major US banks hundreds of billions of dollars in an effort to spur more lending. According to the Federal Reserve's recent survey of US bank loan officers, more than 94% of respondents reported their banks' lending to businesses remained unchanged. This same survey found that banks tightened their lending criteria nearly every quarter over the past two years.
According to recent monthly surveys conducted by the National Federation of Independent Businesses (NFIB), fewer of its members actually sought credit in 2009 than two years ago. Those that did seek credit reportedly faced challenges. “Regular borrowers (accessing capital markets at least once a quarter) continued to report difficulties in arranging credit at the highest frequency since 1983,” according to the NFIB report summary.
Tank trailer leasing companies appear to have avoided the worst of the bank credit challenges, though. Several tank trailer leasing company executives describe how their firms dealt with the challenges.
“We have been fortunate since our inception to obtain competitive funding from our banks,” says Jim Buchanan of American Tank Leasing LLC, which is in its third year of business. “Even during the height of the recession, our banks were willing to work with us. We deal with mostly smaller, community-based banks for financing and have found that they are far more flexible. We meet regularly to discuss opportunities for American Tank Leasing, and our banks work with us to provide the best possible financing to meet our specific needs.”
Ralph Nappi Jr of Transport Resources Inc, says: “We have a long history with several lenders and a strong cash position. Our lenders understand the collateral. It's not difficult. I don't have an unlimited universe, but I have two or three people I can put up against each other, so I can come up with something reasonably competitive. The fact that I can get access to it at all is key right now.”
Bob Baker of Semo Tank/Baker Equipment Co says although funding has become more of a challenge over the past two years, the company maintains a line of credit vendors that have remained loyal to the company and its customers' needs.
“We have been fortunate to have developed relationships with these competitive funding groups, which truly understand the transportation business and are very comfortable with limited risk in the tank-trailer market,” he says. “Quite frankly, we are contacted very frequently by other sources offering funding. However, if they do not have some background in transportation, they're reluctant to offer competitive rates. They offer a lot of ‘blow-and-go’ on the front side, but not much of substance when it comes down to the final deal.”
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