Five Questions With: Robert A. Catanzaro

Robert A. Catanzaro is the president of Rhode Island’s smallest bank: Independence Bank. / COURTESY INDEPENDENCE BANK
Robert A. Catanzaro is the president of Rhode Island’s smallest bank: Independence Bank. / COURTESY INDEPENDENCE BANK

Robert A. Catanzaro is the president of Rhode Island’s smallest bank: Independence Bank. The East Greenwich-based bank specializes in small-business lending through the U.S. Small Business Administration’s flagship 7(a) loan program. Catanzaro talks with Providence Business News about SBA lending and what lending trends are telling him about the local economy.
PBN: What role does SBA lending play at Independence Bank?
CATANZARO:
Small-business lending is the only type of lending we do at Independence Bank. All of our small-business lending is done through the SBA 7(a) lending program. Our tagline is “Our Business Is Small Business.”
PBN: Why is small-business lending important to the bank?
CATANZARO:
Since we specialize in small-business lending, our revenue is primarily derived from it. We believe we are helping small business while growing Independence Bank. We are consistently one of the top SBA 7(a) lenders in Rhode Island.
PBN: What is Cool Cash Connect and how does it help potential borrowers?
CATANZARO:
Cool Cash Connect is our small business working capital term loan program for loans up to $150,000. We are helping many small businesses with this program because it provides general working capital. The small business can use the working capital for any business purpose. We provide a 10-year term with no prepayment penalty. It is a variable rate loan with a current interest rate of 6.25 percent, tied to the prime rate. The monthly payment on a $150,000 small business loan is $1,685 per month. So it is very affordable loan for the small business. We have developed a proprietary online pre-application website located at www.coolcashconnect.com. We can prequalify a small business in one business day. We can close most of the loans that prequalify within 30 days of loan application.
PBN: What’s the most common challenge small businesses face when they come to Independence Bank in search of a loan?
CATANZARO:
The most common problem we see with small businesses is lack of working capital. Since the financial crisis [of 2008], we have seen many of the larger banks cut back on their small-business lending. We see many small businesses that are healthy but have increased accounts receivable. Cash flow is tight. Customers just aren’t paying as fast as they used to, but the small business still needs to make payroll every week. Our working capital loan provides a financial cushion to the small business.
PBN: How has small-business lending activity changed in the last few years and what does that tell you about the local economy?
CATANZARO:
We have seen a dramatic increase in merchant cash advance loans to small businesses over the past couple of years. These online loans can fund quickly, but they have interest rates in excess of 30 percent, and require a daily Automated Clearing House payment from the business operating account. The small business has payments of $200, $300 or $400 per business day, because the ACH loans are required to be paid back in a short period of time. This is certainly not good for the local economy. Independence Bank is refinancing many small businesses that have run into trouble with these ACH loans, providing them with needed working capital on reasonable terms.

No posts to display