Business

Recession or not, bankers urge business owners to prepare for rocky times


Jude Melville, b1BANK CEO (Don Kadair)

As the Federal Reserve plans more interest rate hikes to combat inflation, the chances for at least a mild recession grow. 

Business owners might be a little more cautious than usual, but the sorts of things they should be doing aren’t necessarily all that different from how they normally run their business, bankers say. 

“You should always be preparing for a storm on the horizon,” says Scott Gaudin, chief lending officer with Currency Bank. 

Businesses should evaluate their debts and potential debts with multiple sources of repayment in mind, which is good practice in good times and bad, he says. Businesses that have conserved capital for a rainy day may have opportunities to grow while others are pulling back.

“Now’s probably not the right time for making venturesome investments,” says Jude Melville, CEO of b1BANK. “It’s still a time to invest in growth and the future.”  

Having a diverse client base, rather than depending on a few large clients, is especially important now, he says. 

“You want to make sure that you have a relationship with a banker when things are good, so that when things are worse, you’re not introducing yourself for the first time,” Melville adds. 

Melville says clients in the industrial sector are less concerned with higher interest rates than with supply chain issues that are limiting how much they can make and sell. While demand for commercial real estate loans has not dropped off precipitously, he says, the impact of higher rates likely will be seen in a couple years when loans are up for renewal and the collateral properties are worth less.





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