Marine Bank & Trust working closely with its small–business customers, an active lender; community banks are best positioned to help small firms now

By Ken Datzman

Vero Beach–based Marine Bank & Trust, which has a full–service office in Melbourne, is playing offense during the coronavirus pandemic as it reaches out to its small–business customers.

“We are actively lending,” said industry veteran Lory Milton, vice president/commercial loan officer at the Marine Bank & Trust branch at 3303 Suntree Blvd. “The bank has always been in the business of lending money, and we’re staying relatively busy with commercial loan requests. Some of our clients are in industries that are seeing strong demand for their products.”

She added, “We have a strong balance sheet and we have strong bank leadership. Our board members make smart financial decisions on how we lend. It has put us in a nice position. We might have a bump in the road once in a while, but we are going to recover.”

Her bank closed 2019 with an increase in loans and core deposits, record profits, and an increased value for shareholders. Highlights of Marine Bank’s 2019 include year–over–year asset growth of 6 percent, with $286 million in total assets at Dec. 21, 2019. Loans outstanding were $242 million as compared to $218 million on Dec. 31, 2018, an increase of 11 percent.

“And we started 2019 with a lot of momentum,” said Milton, adding that she recently had a conference call with some local general contractors that specialize in commercial construction.

“I reached out to businesses to get their general feeling about activity in the market. The contractors I talked to seemed optimistic, which was refreshing considering the business environment we’re operating in now.” She said “it’s nice to see our community partners in the construction industry staying active. General contractors, I believe, are tweaking things as they move forward in this environment.”

Independent banks such as Marine Bank & Trust are an integral part of Main Street because they invest local dollars back into the community and help create jobs. Their relationship banking philosophy is ingrained in the way they conduct business, one loan — one customer — at a time.

“I’ve said this many times, but it bears repeating — Marine Bank takes our distinction as a community bank very seriously, and as a result, we strive to be a dependable source for local businesses and residents,” said Bill Penney, president and chief executive officer of Marine Bank.

In 2019, his bank closed 298 loans totaling $113.6 million that included $50 million in commercial loans helping 132 small businesses grow and create new jobs, $62.5 million in mortgage loans that assisted 166 families in purchasing or refinancing their homes, and more than $1 million in consumer loans.

“We work closely with all types of small businesses,” said Milton, whose bank offers commercial real estate loans, construction loans, commercial lines of credit, U.S. Small Business Administration loans, and U.S. Department of Agriculture loans.

“Small businesses drive the economy and create most of the new jobs in America. Community banks like ours are tied directly to the success of small businesses,” she said.

Small businesses are the lifeblood of the U.S. economy because they create two–thirds of new jobs and drive innovation and competitiveness.

A new report by the Small Business Administration shows that they account for 44 percent of U.S. economic activity. The U.S. gross domestic product is the market value of the goods and services produced by labor and the property located in America.

The government’s “Small Business Profiles” report shows that small firms added 1.8 million new jobs in 2019. The U.S. has 30.7 million small businesses that employ 47.3 percent of the private workforce. These numbers clearly show small businesses are at the forefront of economic growth.

The “American Banker,” a longstanding daily trade newspaper and website covering the financial services industry, posted an article April 7 touting the importance of community banks.

“With an invisible enemy uniting the nation, the vibrant network of more than 5,000 local banking institutions, if properly harnessed, can be a crucial weapon. There is no better vehicle available to stabilize the nation’s economy than the banks rooted in their local communities.”

The article goes on say, “These banks are closely connected to individual and small–business borrowers, with loans usually secured by residential and commercial real estate, farmland, and automobiles in cities, suburbs and towns across the country. While all banks, their customers, and the communities they serve, will benefit from the CARES Act recently adopted by Congress, more help specifically for smaller banks and middle America is necessary.”

The U.S. Small Business Administration launched the Paycheck Protection Program, a $349 billion emergency loan program created when President Trump signed the “Coronavirus Aid, Relief, and Economic Security Act,” or CARES.

The program provides forgivable loans up to $10 million to small businesses left financially distressed by the coronavirus pandemic. The loans, which are being administered at the local level by a national network of banks and credit unions, are designed to maintain the viability of millions of small businesses struggling to meet payroll and day–to–day operating expenses.

Community banks are at the center of this activity, working with their small–business customers. The loans, which are 100 percent backed by the SBA, are being provided to small businesses without collateral requirements, personal guarantees, or SBA fees. Those eligible for the program include small businesses, certain nonprofits, veterans’ organizations, self–employed individuals, independent contractors, and other businesses meeting SBA size standards based on their North American Industry Classification System code.

The Paycheck Protection Program’s maximum loan amount is $10 million with a fixed 1 percent interest rate and maturity of two years. The loans are available to cover up to eight weeks of average monthly payroll (based on 2019 figures).

The SBA will forgive the portion of loan proceeds used for payroll costs and other designated operating expenses for up to eight weeks, provided at least 75 percent of loan proceeds are used for payroll costs.

Also, the Florida Small Business Emergency Bridge Loan is available to small–business owners statewide that experienced “economic damage” as a result of the coronavirus. These short–term, interest–free working capital loans are intended to “bridge the gap” between the time a major catastrophe hits and when a business has secured longer term recovery resources, such as sufficient profits from a revived business.

Milton said Marine Bank & Trust is active in SBA lending programs such as 7(a) and 504, which are tailored to small businesses.

The 7(a) loan program is the SBA’s flagship program for providing financial assistance to small firms and offers guarantees on loans of up to $5 million, with reasonable terms and conditions. These types of loans are commonly used for acquiring land, purchasing equipment, or working capital, she said.

The 504–loan program provides capital to small businesses for the acquisition of fixed assets to promote economic development in the form of long–term fixed–rate financing on attractive terms.

“Under this program, the SBA authorizes certified development companies to provide financing to small businesses with the help of third–party lenders, such as Marine Bank & Trust,” said Milton.

The maximum amount is generally $5 million; however, certain eligible energy–efficient or manufacturing projects qualify for up to $5.5 million.

Typically, small business borrowers make a 10 percent down payment, a bank or credit union finances 50 percent of the project costs in the first lien position, and a certified development company (certified by the SBA) finances 40 percent of the project cost in the second lien position that is guaranteed by the federal government.

This loan program, with 10–, 20–, and 25–year fixed–rate options, is used for commercial fixed assets such as land, property, construction, or equipment, with total project costs from roughly $100,000 to $15 million.

“The 504 loan program is especially attractive to small businesses because the rate is fixed for a long term and it allows for a low down payment,” said Milton.

The core mission of the 504 loan program is to provide long–term financing to small businesses to spark the creation or retention of jobs and to support local economic development, said Milton.

In 2018, the SBA for the first time made 504 loans available with a 25–year maturity, expanding the program to help small businesses.

The option for extending the payment cycle by an additional 60 months gives small–business borrowers the “opportunity for lower monthly payments, which can significantly help their cash flow,” said Milton.

This increased flexibility in their loan terms will put them in a better position to manage their capital and face challenges like rising operating expenses.

The SBA recently announced its fiscal year 2019 lending numbers. The organization’s numbers show that it guaranteed more than $28 billion to entrepreneurs that otherwise would not have had access to capital to start, grow, or expand their small business.

In fiscal year 2019, the SBA’s 7(a) program made 52,000 loans totaling $23.1 billion.

The 504 programs had another year of increased performance, with more than 6,000 loans made for a total of more than $4.9 billion.

“Our partnership with the SBA is outstanding and a lot of small businesses in the region are benefiting from their loan products and working with Marine Bank,” said Milton.

She added, “I think people are going to be excited to get back — sometime soon, I hope — to their daily routine. When that happens, it’s going to be almost like a windfall. That’s how I see it. People will again be visiting restaurants and bars and actually sitting down and eating with friends. So when that gate opens, I believe we are going to see a sharp rebound in economic activity in Brevard. Getting back to normal is going to be great. Meanwhile, our county has been strong.”

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Lory Milton is vice president/commercial loan officer at Marine Bank & Trust in Melbourne. She works closely with many small–business owners in the region. Her bank is an active lender, including participation in Small Business Administration loan programs such as 7(a) and 504, which are tailored to meet the needs of small–business owners. She believes the county will bounce back sharply from the coronavirus setback. ‘It’s going to be almost like a windfall.’