Featuring Citizens and their guests

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Episode Transcript

(00:00):
The following is a paid podcast.iHeartRadio's hosting of this podcast constitutes neither an
endorsement of the products offered or theideas expressed. It's time for Mind Your

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Business on seven ten w R andthe iHeart Radio Network to present the weekly
business radio show produced by the awardwinning marketing firm bottom Line Marketing Group the
LMG, sharing business and marketing strategiesto make you and your business successful.
Now here's your host, the presidentand founder of bottom Line Marketing Group,

(00:49):
Yets Hawks Sapless. Welcome, Welcome, Welcome back to another edition of Mind
Your Business right here on seven tenwar the voice of New York and around
the world on the power full iHeartRadio Network. I am thrilled and delighted
to be co hosted once again bya friend and a senior executive at Citizens,

(01:11):
Mike McIntyre. Again, thank youfor joining me here on the set.
It's been a while. It's beena little bit too long, actually,
it's it's great to be back onit. It has been a while,
but I am so happy to beback here. Good to see you
again. All right, A littlebit, just as far as our intro,
just a brief point and a shoutout to all the different all the
different channels that was syndicated on andthat's where you could pick up the interviews

(01:33):
I had with so many great executives, including Joe Hart, the president and
CEO of Dale Carnegie, and somany other incredible guests. And you know,
just we have so much to covertonight, so I'm gonna go straight
to our incredible guests that we haveagain. I'm co hosted by Mike McIntyre
and tonight show brought to you inpart by Citizens. Citizens is one of

(01:56):
the nation's oldest and largest financial institutions, with assets of two hundred and twenty
three billion. That's as of sixthirty twenty three, that's the last quarter
from when we're recording the show.Headquartered in Providence, Rhode Island, Citizens
offers a broad range of retail andcommercial banking products and services to individuals,

(02:17):
small businesses, middle market companies,large corporations and institutions. They have a
tremendous presence here in the Northeast.On tonight show, we'll discuss the rising
interest rates and the impact that edhas on small businesses, how businesses are
surviving and adapting the role of digitalpayments, processing and invoicing, What about

(02:38):
a lending update in the rising rateenvironment? And on tonight show, I'm
co hosted with Mike McIntyre, headof Business Banking Sales at Citizens. We're
going to be joined by Mark Williams, Head of Business Banking Treasury Solutions at
Citizens, Kate Conroy, Senior VicePresident Enterprise, Payment Strategy and Innovation at

(02:58):
Citizens, Thomas S. Gretch,President then CEO at the Queen's Chamber of
Commerce, as well as John Harmon, Founder and President then CEO of the
African American Chamber of Commerce of NewJersey. And we'll also be joined by
Abe Schlisselefeld, Senior Managing Director atc BIZ, Marks Panneth. Wow,

(03:19):
Mike, quite a quite a rosterfor show together in a long time.
Let's just jump right in, youknow. Yeah, a lot has happened
in the last two years. Citizenshas has stepped into the New York market
in a very big way. They'vealso acquired historically there the retail branches of
the former HSBC on the East Coast, which essentially puts us in the in
the top ten here on the EastCoast diversified bank with almost eleven hundred branches

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across the country, so great organizationgrowing in a very meaningful way here in
the Metro New York market where Whistlersart tonight, and we have a very
long tradition of being in this spacehistorically, and it's been a great run
and I'm very excited to see whatthe future holds. Amazing. Now,
if I'm going to turn to MarkWilliams, Mark, welcome to mind your

(04:03):
business. It's welcome to you,sir, and thank you for having me.
I really appreciate amazing. Now,there's been tremendous changes in the payments
and cash management space, impacting everytype of small business owner. Can you
give us kind of the state ofthe current technologies available to small businesses and

(04:25):
all types of covering the range ofconsumers that citizens services. Yeah, I'm
happy to right now. Look,I think the pace of change in the
payments arena has been almost staggering,especially for small businesses. In the recent
past, I think Covid accelerated itquite a bit. The good news is

(04:46):
it's become much simpler for small businesseslike they're It's easier for them now to
accept payments and manage cash. Nowthe difficulty I think sometimes is there's so
many options and so much competition anddifferent straight up different payment options out there,
just different types of payments that itcan be hard for a small business

(05:06):
owner really understand where payments fit intotheir ecosystem, into their customers buying process.
And that's really kind of where researchcomes in handy and honestly, radio
shows like this really getting some advicefrom some people that are kind of embedded
in the industry. So a fewthings that have really changed, I think

(05:28):
that really grown rapidly. So justthink about peer to peer payments, right
so things like Venmo, cash app, PayPal, et cetera. Those have
grown significantly in the last few years, real time payments, which is something
that didn't exist, you know,twenty years ago, as well as same
DAC like these are just like justa few of examples of things that have

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changed. And right there there arethree wildly different kind of modes of accepting
payments. So I hope that answersyour questions, sir, Yes, yes,
so this question, I'm also goingto turn to Kate Conroy along with
you. Mark. It seems thatmobile payments are extremely common these days,
right, just whip out the smartphoneand all right, I just want to

(06:12):
do my banking. Can you pleasetalk about the array of services that Citizens
offers just from the convenience of asmartphone. Yes, of course, So
at least said business on the gois more important now than ever. I
think COVID the pandemic really showed usas the society how important it is to

(06:32):
be able to continue things digitally andon the go. So mobile is more
important than ever, and banks likeCitizens, as well as a lot of
fintech providers out there, are alsorecognizing that in instead of having a mobile
first strategy, Citizens has a mobilefirst strategy. We put everything in mobile.

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Then we try to have our webversion have the same functionality, but
we start with mobile because that's wheremost of our customers are are doing their
banking and doing and they're out onthe go that they don't have time to
be in front of a computer,thus especially their banking, so it should
be easy, it should be acceptable. So that's very much a strategy for

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Citizens as well as many banks andsin tech providers out there. And you'd
talk one thing I would I wouldadd, so when you think about the
first question you asked around the changesin the payment's landscape, and then you
add and mobile. Look, thingshave transformed rapidly, right, But at
the bottom line, no matter whatchanges to me, what's most important to

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small business owners is how all ofthis can impact their cash flow. Any
one of the listeners that are areentrepreneurs on a business. They know that
they live and breathe what's coming inand what's going out in terms of cash.
So all of these services, atthe end of the day are designed
to really help empower a small businessowner to get ahold of Cashla Mark.

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There are so many terms out therethese days when it comes to mobile and
digital and how a business owner canmanage their business. Can you a takeaway?
Can you speak about what point ofsale means to your average business customer,
and then how does that dovetail intothings like merchant services accepting online payments
or website payments, and then howdoes that then lead into things like invoicing

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and the technologies are alable to supportthat. Those are great questions, Mike,
And you know it's actually interesting iswe were having a discussion earlier in
the week about point of sale becausewhat the term means is kind of changed
over time. So when you goto people that have been in the industry
for a long long time and thepayments and merchant industry for a long time,
that they will tell you that pointof sale is really a system inside

(08:48):
of a retail or restaurant where thecustomer is facing the business owner or whoever's
processing the payment. Where I tendto view it more as any means by
which the point of a customer transfersrevenue or transfers a payment to a small
business owner. It really depends onwho you who you talk to. So

(09:09):
I think in one term, pointof sale really means your system by which
you manage revenue or payments in fromyour customers. Whoever your customers are.
After business the business, if it'sbusiness to consumer, it doesn't matter.
It's really how payments come into yourbusiness, and what plus sales system you
have can really matter. It canreally impact how you manage not just your

(09:31):
cash flow, but also these daysit's like inventory and ordering all kinds of
things can be done through your polasCRM or sort of what we would call
enterprise resource platform. So it reallydepends on the type of business. But
that's kind of a very generic term. Like I don't need to like to

(09:52):
keep it sell eye level, butI hope that that helps you. Now,
invoicing is something it's one of thebiggest innovative changes over the LA say
five to seven years that is pusheddown from corporates, right, That's typically
how these things go. You'll geta technology get adopted in corporate so then
it becomes cheaper and easier for banksand financial firms to deploy to smaller and
smaller customers and they'll be able totake the opportunity as well. So invoicing

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is one of those really key thingsbecause it can massively accelerate your time to
revenue. Honestly, because if yousend a think about this, if you
send an invoice of the mail,well, it takes the time from the
mail, it takes time for thefustper to pay it. It's a piece
of paper and might put it ina stack where if you send them an

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SMS or an email, typically whatare they going to do? Well,
if they've got their phone right infront of them and that's where they're reading
the email or the SMS, chancesare they're going to click pay and then
then they're going to have an optionto Typically pay either via a credit,
credit or ach. So it's ait's a really great way to speed collection,
which we all know is one halfof the of the equation when you're

(11:00):
trying to really maximize your cash flowand liquidity. Mike, that help.
Yeah, Mark, it's a greatit's a great response, and I want
to build on that. Like,Kay, I'm gonna turn to you for
this next part of that question.Right, so you're building on your cash
flows, can you talk about whatpositive pay means and then market after Kate
kind of covers that thought, I'dlove to get your thoughts about, you
know, fraud mitigation because obviously withall these digital technologies out there, you

(11:22):
know, there's there's different things tobe aware of. So Okay, how
about you just talk a little bitabout positive pay for us? Sure of
course. So first I like tostart with statistics. So according to the
twenty twenty two ASP Fraud Survey,sixty three percent of respondent reported that the
organization based fraud activity via checks,and of those who are victims of payments

(11:45):
frauds, almost three quarters of themwere not able to recover the funds they
lost. So it is very muchespecially check fraud is very much something that
should beyond every business owner's mind becauseit just because that hasn't happened in the
past, it does not mean youare safe. It does not mean it
will not happen. It is rampant, it is prevalenced, so it should

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be high on everyone's mind. Positivepay, so positive pay is a is
a service of banks offer that helpbusinesses mitigate mirror risk of check frauds.
So what it logistically is is everytime a business issues a check. Every
time you write a check that goesout to whoever you're paying in a mail

(12:30):
or in hand it and in person, the business would then send a record
of that check to the bank andsay, bank, I just wrote check
number one, two or three tosell and sell for fifty dollars. And
now that issue record is what it'scalled. The bank has that data.
So later three days later, aweek later, two months later, when

(12:50):
that check comes in to actually postto that account the person that wrote the
check, we will compare the checkdata that we have come in and see
if that matches anything that our customergive to us in the form of an
issue record. So if we seethat there is no check that matches,
maybe we see check one two three, first so and so, but instead

(13:13):
of fifty dollars, fifty three dollarsor five hundred dollars or any amounts different
or something, or the check isn'tin our records at all. We then
call attention to that we eat onour online banking platform, we would let
the customer know this is a suspectthe suspect check. Can you please look
at it and tell us if thisis something you want to pay or return.

(13:35):
And the whole service is really centeredaround check processing rules. So in
the US check with check clearing,every bank has the ability to return a
check to the bank that sent itto them because it ordered too and sometimes
it's its own bank. But inorder to collect funds for a check,
the bank that it was deposited intospending it to the bank that issue the

(13:56):
check. So check rule require thatif the bank that receives a check has
twenty four hours to return it,no question to ask, doesn't have to
be a fraud case, no fraudinvestigation. You can just return a check
that first day that you receive it. So that's where positive pay that's based
around those rules. Because as longas we are flagging it for a customer

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and they tell us, oh,I didn't write that check, or I
don't know if I wrote that.That looks like it was. It was
it was changed the amount with change, or someone retouched something on the check.
We'll just return it, no questionsasked. The finals get credited right
back to our customers account and endof story. So that was that in
that case, there was no checkfraud. It was called immediately, there's

(14:41):
no fraud investigation. So it's importantto understand that because positive pay coming in
if you're issuing a lot of checks, Because if you have two hundred checks
posting to your account every day,it's very difficult to keep track of did
I write these two hundred checks?Let me look at myself, spread seat
and no one. It's a lotof work to do that for two hundred
check. So that's where positive paycomes in because the bank is keeping track

(15:03):
of that for you and doing thatmatching ahead of time, stayed the customers
time. However, if you're abusiness owner, that is it's doing maybe
ten checks a month and you don'tadd that kind of volume, and it
is something that you can just washyourself. You don't need positive pay.
You just need to do the sameprocess, which means you would be looking
every morning at checks that posted toyour account last night. Make sure you

(15:26):
wonte those and if you did notwrite the check, or if something was
changed and you do not want itposting to your account, you just call
the bank. Make sure you callearlier in the day. I would try
to call before two pm, andyou just get ahead of any processing time.
Call the bank and say I didnot write this check, please return
it whatever leaves and the bank willreturn it. You don't need to open

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up a fraud piece. Your accountdoesn't get frozen. It's just within that
twenty four hour windows still, soyou can just return it on your own.
You don't need to subscribe to positivepay. Positive pay comes in when
you have a lot of volume,and it's hard to keep up with the
volume. But if you have alow volume, every business owners can be
doing that and I know, takeadvantage of that window, because if you

(16:10):
wait till the second day, nowwe've missed the window and now it's a
fraud investigation and it's a lot morepainful. So it's very important to look
at your account every morning, expectthe activity and call your bank immediately if
you see something that looks suspicious.Mark Any other thoughts on fraud mitigation,
Yeah, actually quite a bit.So a few things to know, Mike.

(16:32):
Like, the first thing about fraudis it's prevalent, and it's been
grown significantly, especially since say twentyseventeen twenty eighteen. The vast majority of
customers are going to experience, atleast in tempted fraud. So I would
say the first thing to do,Look, if you're not writing a lot
of checks, is Cape pointed out, is how do you mitigate checks?

(16:56):
How do you re use using checks? Well, you can do ah,
you could do real time payments,or you could even if you're a disciplined
uh business owner, I would recommenda credit card. Right, putting things
on a on a commercial card ora small business card can be a fantastic
vehicle. You've got to pay itin full though, every month. I
mean you don't have to, butI'd recommend it. I always do when

(17:18):
I'm giving advice, pay it infull every month. But what you do
when you when you do that isone you reduce the incidents of paper checks,
which are by far the easiest vehiclefor fraud. So odd average.
Uh, they're double there, they'remore than double the risk of any other
form of payment checkstar, just becausethey're easier to wash, collect, etc.

(17:41):
And And to sort of plagiarize.But a credit card will allow you
to do a couple of things.One, it'll allow you to control your
spending and you can see everything inone place too. If it's a full
blown commercial card, you can youcan actually control where the spend happen.
So you can actually restrict, accordingto something called the merchant classification code at

(18:03):
McCAT code, you can restrict wherecustomers or where excuse me, where card
holders can make payments. So ifyou've got a few people on your staff,
one person's office supplies and one persondoes travel and entertainment, well,
you can restrict the office supplies personto only office supply merchant classification codes.
So it can be a really handytool to control spending. But it also

(18:26):
gives you, probably most importantly,an additional anywhere from twenty to thirty days
of float if you will right.It gives you the billing cycle of the
card. So if you're paying yourvendors on net thirty, you pay them
on day twenty eight. Twenty nineday thirty on a card and then you
get an additional thirty days with yourworking capital. So it could be one
a great fraud mitigation tool and twoa great working capital optimization tool. Mike,

(18:52):
I'm joined on the set by MikeMcIntyre, ahead of Business Banking Sales
Expansion Markets adds it, and we'respeaking with Kate Conroy, Senior vice president
Enterprise Payment Strategy and Innovation at Citizensand Mark Williams, head of Business Banking
Treasury Solutions. Now, before wego to a commercial break, just say

(19:12):
an important question from your experience,what do you see as some of the
current trends and possibly a preview ofwhat's coming. And perhaps you can even
talk about the recent survey done byCitizens, the Citizens Business Resiliency Survey.
Would love to hear about that absolutely, so there's a few things you'd save.

(19:34):
One of the things that the surveyrevealed to us is that resilient customers,
that is, customers that can canor small businesses excuse me, small
businesses that can withstand sort of turbulence, disruption, etc. In the market,
they tend to take twenty five percentmore payments. We're waiting by that

(19:56):
so different types. Not necessarily thevolume, that's obvious, but I've gotten
more options available to my customers asa business owner, so I can take
different forms of payments, So Ican take ACCH, I can take credit
card, and I can take Venmo, PayPal, et cetera, et cetera.

(20:18):
So that is really really critical.The other thing I would say is
that company small business owners that reallyfocus on cash flow tend to be much
more resilient. So on the average, eighty two of small business failures can
be traced to a lack of cashflow management. So resiliency. We know
inter recession customers with more liquidity,business owners with more liquidity, stronger balance

(20:44):
sheets tend to not just survive therecession, they tend on average to come
out of the recession and a strongerposition and wind up doing significantly better than
their peers because they're able to takeadvantage of opportunities that may come their way
as a result of an economic downturn. So really focusing on cash flows with
the idea of building liquidity and balancesheet I think are critical. Okay,

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if you have anything to add yes, Kate, Yeah, Well, in
addiction to what Mark was talking about, I think more macro trends that we're
going to be seeing and coming inthe future are probably much more adoption and
usage of URTP, which is anew payment clearing network that was just five

(21:30):
years ago created, so it's thefirst time in probably four decades we have
a new payment method to add tocheck wire AH and credit cards. So
OURTP is just you know, gettingstarted. It's a twenty four seven three
sixty five immediate payment. The receiverof the payment has it in our account

(21:51):
within seconds because of the holiday,even if it's three am. So that's
gonna that'll start to change. Ittakes a while for systems and like business
processes to adapt to new options,but I think we'll definitely be seeing that.
And now it's sent now that justwent live, which is kind of
an alternative to our TP but similarconcepts. We're going to be seeing more

(22:11):
real time payments enter the ecosystem ofpayments, and I think we're going to
be seeing a lot more consolidation inthe market, especially bringing banks and FinTechs
and software all together so that customersand businesses are able to do what they

(22:32):
do without having to go somewhere elsefor their financial services. Their system that
they're using all day long will justhave their financial services in there. If
they're banking with citizens, citizens willbe in their business software. It won't
be a separate thing that they haveto go deal with. So I think
we're that's very much starting to happen. It'll keep happening, and I think
the idea is just simplicity, easybundling things so that you don't have to

(22:59):
deal with different places to go getsomething done. I go here for my
invites, I go here to dothe payment piece in it. Gonna have
to update them. That'll start comingtogether. It already is in many cases,
and I think we'll see much moreabout which will be benefitial to do
all of us. I think inthe end tonight show which is just a
boon, tremendous value to small businesses, a business of one, and of

(23:23):
course a business of many, tomajor cooperations, all who can benefit from
the services offered by citizens. We'regonna take a show commercial break. Stay
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(23:44):
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(25:12):
best and do more of it.One of the gifts I believe that we
have as entrepreneurs to be blue skyvisionaries, come up with amazing ideas,
Yet you're only as good as yourexecution. I've always had coaches my entire
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(25:33):
around me earning a certain amount ofincome or taking a certain amount of time
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(25:53):
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I'm norm trainer. We educident courtentrepreneurs to build a high performance business.
Learn more by visiting www dot CovenantGroup dot com and we're back. Mind

(26:40):
your business with the sex aplis righthere. On seven ten. Wore the
voice of New York and around theworld on the powerful iHeart Radio network.
Tonight show, brought to you inpart by Citizens is one of the nation's
oldest and largest financial institutions, withapproximately two twenty three billion in assets as
of June thirtieth, twenty twenty three. My co host Tonight in the studio

(27:07):
Mike McIntyre. Mac McIntyre, whodo we have coming up now? It's
not great to have you here,and i'd like to welcome to the show
tonight, Tom Gretch, President andCEO of the Queen's Chamber of Commerce.
Tom, welcome, good to seeyou, Hello, and thank you very
much for the invitation. I'm grateful. Tom. Quickly, how how are
your members doing and how's the Chamberof supporting them these days. It's kind
of a one two punch. Wekind of got through the COVID And as

(27:30):
an example, we have six thousandof restaurants and Queens before the COVID,
we've lost a thousand and most ofthose are not coming back, but in
its place due to the resiliency ofour great immigrant population and hard chargers out
there, as well as the entrepreneurialspirit. I've been doing more ribbon cuttings
across the borough in the last sixmonths or so than I think we've ever

(27:52):
done before. So things were bad, got really really bad, much much
better based upon the general ecomic situation. But again we got things like a
play shim and government uncertainty and odorousrules or regulations that are really really tough
in any environment, but especially toughright now in Queens. But we're showing
our resilience and how are you members? So how does the chamber supporting him

(28:15):
these days? So during the courseof the COVID, we were very,
very lucky and blessed. It wasthe best of times. It was the
worst of times, as they say, right, So we were able to
get grants and to the generosity ofa Steven Alex Cohen Foundation. They gave
seventeen and a half million dollars toa number of different organizations in Queen's County.
I was lucky and blessed to beamongst one of them, and we

(28:37):
gave out the most money. Iwas Santa Claus for about four months during
the worst part of COVID, givingout unrestricted grants, and so we did
a lot of work in that area. Another thing that we did was we
didn't really worry about whether or notyou were a member of the Queen's Chamber
of Commerce. We've been around sincenineteen eleven, and I kind of felt

(28:59):
I went to my board, Imade this request, We're going to serve
everybody, not just our members.And members kept paying their dues for the
most part, but at the endof the day, we served everybody.
We also got a significant funding we'reready to roll out on August seventeenth a
press confidence regarding some funds we gotfrom Congress Onoman Grace Maang to help out

(29:21):
some of the local community in ourdistrict with not only financial advice and HR
advice, but legal advice in fivedifferent languages. So we're very, very
excited about that. Program. Youknow time we're an interest rate cycle nowhere
where rates have risen, particularly theshort term rates, at a very high
pace or clip over the last yearyear and a half. What are you

(29:41):
hearing from members with regards to howthey're dealing with rising interest rates? It's
killing their expansion plans. Those thosewho wanted to grow and take that a
load or even do a home equityline of credit on properties in m own
have been put by the wayside.They're just trying to right now work off
of cash and continue to work ongetting market share in many cases, but

(30:03):
actual business expansion that might include acapital request are kind of put by the
wayside, which you know, forthe banking segment is not good news.
We're speaking with Tom Gretch, Presidentand CEO of the Queen's Chamber of Commerce,
Tom As as we close out thesegment here. You know, you've
been known as one of those folksthat can think out of the box and
often does. You've been quite successfulwith the Queen's Night Markets describe that for

(30:26):
us. So we support John Wangand Company over there with a promotion and
advertisement. We've not actually been onsite, although I know many of my
members and some of our staff gothere, but we're doing a lot of
different work in the restaurant space.So one of the things that we're doing
is a is a kitchen incubator thatwe're working with a developer on in Western

(30:48):
Queens that we're very excited about.If I learned one thing out of this
COVID situation is that the people thatserve and work in restaurants were willfully unprepared
and also not looked after very well. So we're making in our business now.
You know, as everybody knows whetheryou live in in Sheboygan or Peoria
or whatever, but in a placelike Queens, the ethnicity of our restaurants

(31:11):
at listening to our people defines neighborhoods. When a restaurant closes, it brings
a whole cultural segment is ripped outof their heart and the fabric of the
community. So we're making sure acrossthe board that we help and support our
small businesses. It's a big partof the reason that we jump in and
saved Nearest Tavern. It's a bigpart of the reason that we jump in
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(31:36):
wonderful opportunity to let these small businessesshine, and we're happy to continue that
trend. You know, it's sorefreshing to hear from someone who's on the
front lines. Thomas Scratch, Presidentand CEO at the at the Queen's Chamber
of Commerce. Here on Tonight's BusinessBanking Updated. When I take a short
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(33:59):
the Business Banking Update brought to youby Citizens. My co host Mike McIntyre
of Citizens is going to now featureand have a couple of key questions from
the front lines speaking with Abe SchlisselfeldSenior Managing director at cebiz Mark Panneth Abe.
Great to have you here and welcometo the show. Thank you,

(34:21):
marky Yslo. It's great to behere and look forward to the conversation.
Great. We're in a rate cyclenow where rates have come up substantially over
the last two years. How isrising rates impacting a borrower's ability to borrow
money? But more employee, howis it impacting folks ability to borrow and
refinance right now? That's a greatquestion. It's it's something that we're speaking

(34:42):
to our clients and our network,both colleagues on a daily basis of not
hourly basis. The amount that interestrates have gone up over the last you
know, a few months or sois really changing the landscape of investing in
real estate. There are many operatorsout there at the last time interest rates
were this high, I'm not evensure that they were in elementary school and

(35:05):
that they haven't been faced with uhuh, this this kind of an environment.
But if you plan the right way, it's uh you can you can
definitely manage around it. And whatdo I mean by that. So you
know, I'll certain buildings or investmentswere made modeling out using extremely low interest
rates, let's use two to threepercent. So obviously, when you get

(35:28):
into an environment now where you know, some of the loan ones that were
you know, done four or fiveyears ago, they're coming up on the
on the on the term of resettingthe rate, they're in for a shocker.
But if you have the right uhfinancial modeling in place, and if
you have the ability to pay downsome of the principle and model out the
next few years appropriately, you canreally come out of it. I'll use

(35:52):
the words relatively unscathed, assuming thatyour ltv UH originally wasn't that extremely on
numbered. If you long to valuewas at a high number, and now
you're faced with perhaps a lower rentand role than you did a few years
ago, there will be some challenges, and you know, you can still
try to work it in with somebringing in some some new investors, new

(36:15):
outside money, but there's no questionthat the increase in interest rates and quite
frankly probably will still be going upa little bit as having an impact.
You know. That being said,there's all different types of asset classes,
you know, everyone's talks about realestate as you know, one type of
investment, but there's there's certain assetclasses I'll use multi family and certain geographic

(36:42):
areas you know, talk about youknow, down South and you know Texas
and West, et cetera. Someof those asset classes have actually been doing
pretty well. And uh, youknow, due to COVID, people can
travel more work remotely and they've benefitedfrom that. So and in addition to
that, because of the high interestrates, a lot of people aren't buying

(37:05):
houses that are now renting. Sothere's a lot of factors into into different
asset classes. Industrial is you know, still doing pretty well. So you
know, the main focus and it'sobviously the largest numbers is on the office
space, and obviously office space ishaving you know, some challenges now.
But you know, as we startgetting into more of a i'll use the

(37:28):
new normal. I can't believe wewere saying that for a few years,
but you know, as we startgetting more acclimated, so the new normal
and people saw them modeling out theirdeals using these higher interest rates. You
know, things will work out,but there definitely will be some headwards and
challenges over the next you know,three to eighteen months, as a lot
of these loans them do. Yeah, you were discussing different types of of

(37:53):
of asset classes a moment to go. You know, there's essentially really three
different types of lending that banks.We typically have commercial real estate financing,
fixed asset financing, and receivables andimentory financing. Can you die this kind
of distinguish between those types of lendingand how your firm and how customers you
look at that in these days?Yeah, so so reels they're financing,

(38:15):
which is something that I deal witha lot more than the other ones.
Is you know, the conventional youknow, we all know it's uh,
you know, there are people thatown their own homes and go out for
financing, and then there are thosethat you know buy investment properties, get
whether their office buildings, industrial,commercial, hospitality. The list goes on
and on and and you know,you go out, you get you get

(38:37):
the financing and the general generally speaking, and it's a lot of different ways
to do it, but generally speaking, the asset is basically ly is what
is securitizing the loan from the bank, and uh, you know, the
bank needs to make sure that thevalue of the of the asset is sufficient
cover the debt. And I'll getto another two in a second. But

(39:00):
but but the concept of the asset, the value of the asset being enough
to cover the debt is Uh,there's an important one. As a lot
of the loans are coming due now, they're having a lot of discussions with
banks about extending because the reality isthe vast majority of banks, not all
banks, but the vast majority ofbanks are willing to wait a little bit

(39:23):
more to see what happens with valuesbefore they start taking over buildings. They're
generally the business of banking and onthe business of real estate management. So
so it helps a little bit forthe real estate operators that are going through
some trouble waters. Fixed asset financingis generally in the in the manufact generally

(39:45):
in the manufacturing distribution world. Uh. You know, people have plants and
somewhat similar to to real estate,a lot of this equipment to produce their
inventory is is very expensive and insteadof going out take money out of your
bank account, you can get financingfor it. And uh, you know

(40:07):
again, banks are securing the loanby attaching a lean on on the on
the on the asset, and they'resecured by the value of that asset.
UH. Again, fixed asset financinggenerally more expensive than real estate financing because
buildings are generally speaking easier to sellthan uh, you know, a heavy

(40:27):
piece of machinery that may just bespecific to a certain industry or uh even
to some location, you may notbe able to necessarily move it because these
said, these are real we're talkingabout We're not talking about, you know,
a mixer. We're talking about realheavy pieces of machinery that are uh,
you know, I would almost equatethem to uh to a building,
although they're not buildings. And thenfrom inventory or stable's financing. It's something

(40:52):
that's uh it's always been around.Some people go factoring as a lot of
different terms that are used there.It's been getting a lot more popularity over
the last year or so as we'vebeen going through some of these uh economic
challenges. And basically, if acompany has inventory or receivables and we you
know, you go to the bankor factor and UH you come up with

(41:15):
some sort of a rate that they'rethey're comfortable paying to to ensure the collectibility.
And so the bank has some hassome both risk and upside and the
collectibility of the inventory and the andthe receivables. We're talking with A bristle
Feld, senior managing director at cBIZ Mark's petteth A. But as we

(41:37):
quise out the segment, you know, we talked a little bit about real
estate and rate resetting and and theand the value of transactions these days.
You know, what are you seeingout there with regards to new acquisitions?
Are you seeing transactions occur? Areseeing buying happen these days in the market?
Yeah, so you know, increasingices rates is changing the landscape.
You know, one thing I dowant to say and uh, you know,

(41:58):
I'm coming on here as an accountantson addition to obviously well the consulting
on the business side that we dowithout clients, we like to, you
know, give them tax advice aswell. So uh, and I'm not
going to give a whole course hereon taxes. And you know the new
tax law in twenty seventeen, butthere is one very significant portion of it
that as a combination of interest ratesgoing up as well as a change on

(42:20):
the tax law in twenty twenty twothat has an effect. And to to
put in a most simplistic UH sentence, Your interests expense can be limited depending
on a lot of other factors UHin the operations of your business. And
while until twenty two it wasn't anissue, always less of an issue it

(42:42):
was interest rates to a lawer,and also the law made it a lot
easier to be able to take thefull interest expense. Starting starting in twenty
twenty two, there were a lotmore limitations put put on. And there
are many real estate operators out therethat, as UH interest rates something going
up, combining with the change ofthe AXE law, have not been able
to deduct freecome tax purposes on thefall amount of interests best at PAIN.

(43:07):
So there's been some headwinds there andthings to think about and how that structure.
What we've been seeing a lot islenders are very hesitant right now to
lend on real estate. They're notsure yet where the cycle as where it's
going. And that's both of theeconomic values and the interest rates, and

(43:29):
it's it's it's very hard now toget what i'll calls the conventional loans auto
purchases that we've been accustomed to overthe last bunch of years, where you
know, after seven there was aslow down, but by on nine the
banks were ramping it up again.We're sort of seeing a slow down now.
What we are seeing is whether it'sfrom the lending institutions or other groups

(43:52):
out there, is willing to fundthe money but coming in as an equity
bonner and and essentially they're they're willingto take some of the rest, but
they want more of the upside thanthey've been accustomed to getting in the past.
And you know, there's always thatpushing up Paul Bitgon operators and what
does that do to their business modeland is it feasible or not? And

(44:13):
so it's some interesting times. Whilethree years ago, four years ago is
as easy as dauntee your local favoritebank getting the loan on the building,
now is a little bit more speakingto multiple institutions and negotiating more on what
makes sense about the bank as wellas the operator. Abe Schlisseefeld, Senior

(44:35):
Managing Director at CBIZ marks Panneth aspecial thank you for sharing your wisdom,
advice perspective here on the business BankingUpdate brought to you by citizens. For
more information, visits citizens bank dotcom. Citizens bank dot com. We're
gonna take a shore commercial break,Stay tuned. Paraflight luxurious and private.

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(47:00):
Voice of New York seven to tenw R and around the world on the
powerful i R Radio Network. Tonightshow The Business Banking Update, brought to
you by Citizens. I'm co hostedwith Mike McIntyre, head a business banking
sales at Citizens and now we havean update from the front lines. We're
gonna be joined by John Harmon,founder, President and CEO at the African

(47:24):
American Chamber of Commerce of New Jersey. Mike, John, Welcome and grate
you have you back on the show. It's been a while, and I'm
so glad you're here with us.Just delighted to be here, John,
I'm gonna jump right into it.Lots happened in the last couple of years.
You know, how is your chamberof supporting you member these days?
Well, it's always been about advocacy, connecting I members to resources, the

(47:46):
opportunities and information to contribute to thesuccess. Mike. You know when you
hit the chuck up Steeky and Iwere D and I D and the I
as a about the engagement. Butthe conversation for us is about transformation,
pushing back for perceptions. That's howwe get it done, either electronically or

(48:10):
an in person event, just youknow, pressing flesh and forcing the conversation.
You know, John, we're inan interest rate cycle now where rates
have gone up quite substantially, particularlyon short term borrowing or overnight borrowing,
over the last few years. Howhave rising rates impacted your member's ability to

(48:34):
borrow and how are they reacting tothese rates these days as having a chilling
effect. So like you know thatone of the cornerstones of creating wealth as
home ownership in thirty five, thethirty seven percent of the Blacks and New
Jersey owned homes, and typically theequity from the home is what you used

(48:58):
to start a business. That's sothe costs of barrowing is really styming some
of the plans of growth and expansion. And then you make that even worse
when you're struggling to get opportunities.I think if businesses can't get access to
more opportunities, the capital is easierto find. It's just a matter of

(49:19):
the cost at rising interest rates,and you have the minimal disposal income,
and it's a real it's a realchallenge for households as well and small businesses.
And you know, as you thinkabout your members and and and their
borrowing. You know, we've hadchats this evening with other guests talking about
real estate and the impact of acquiringnew buildings or refinancing uh existing debt.

(49:44):
What kind of education can your membersreceive from your chamber. Well, the
great thing is we have a relationshipwith citizens and you're willingness to participate with
us or financial literacy discussions on discussionsabout homeownerships and also how to navigate having

(50:05):
a good relationship with a bank.I think that's key and having a relationship
with you and folks like you makeit a lot easier for small businesses animal
individuals to get the better place inlife. You get an opportunity. It
didn't have to ramp up to getyour financials, sill a bank and built

(50:27):
in that whole orientation. By thetime you do that, you've lost the
deal. So having a relationship withcitizens has been key and very helpful to
make it a lot better for ourmembers. Now, John, I hope
not putting you on the spot here, but my understanding is that your chamber
is going to be expanding to theNew York metro market. Could you please

(50:50):
talk about that and your plan foroutreach and engagement with the community. Well,
yes, we established an organization calledthe New York State Black Business Alliance.
It'll be a division of the AfricanAmerican Chamber of Congress of New Jersey,
which you know has been around alittle north for sixteen years. We're
just shy of twenty employees and we'rean accredited institution, and so what we're

(51:15):
looking to do is have this kindof a regional approach on both sides of
the hudset. We're not looking todo subtraction in New York. We're looking
to have a addition and we workat harmony with other organizations that have a
similar mission. But moreover, we'reall sectors of New York. So when

(51:36):
you drilled down, it's all aboutnumbers. Ninety five percent of Black businesses
in New York State their sole proprietorships, you know, although they have a
larger footprint of businesses and notwithstandings standingthe policies like the goals of the thirty
percent min Arty and Women on Goals, and we want to engage in that

(51:59):
Congress station and to help more Blackpeople and Black businesses in partnership with two
the other sexes of society get tohave a better life. You know,
John, as we look to closeout this segment and you talk, we're
talking this evening with John Harman,the founder and president and CEO of the
African American Chamber of Commerce of NewJersey. You know, yeah, we

(52:21):
we try to put a show togetherhere which gives our listeners real time information,
you know, real time nuggets ofknowledge to really help them grow their
their small, midsize and growing businesses. You know, as you look at
the role of your chamber going forward, Now what are your two or three
priorities you know in the year ahead, Well, I think introducing I remember

(52:45):
businesses to emerging markets, the wind, the maritime, healthcare technology in general,
and I'm getting more capital the businessis done, are looking to grow
and scale. So that's kind ofwhere our focus is. It will continue
to be, but it all startsconnecting with those who have the resources and

(53:08):
opportunities and information. And we we'vehad a pretty good track work of success,
so giving a returning investment, butthose who subscribe to the membership of
the of the advanced case through respectivechambers. So John, you know,
we've been talking tonight, you know, with with other Chambers of Commerce presidents

(53:29):
and Tom Gretchen and Queens was talkingabout how his his borough has the most
diversity in the world. We spenta lot of time talking about restaurants and
really you know, the traditional businessesthat make our communities great. You know,
New Jersey is on the cutting edgeof quite a bit of innovation these
days. You know, I'd loveto get your thoughts about some of those
emerging business segments business areas that yousee in the state and how the Chamber

(53:52):
of supporting that endeavor. Yeah,absolutely, and the governor has made a
handful of them the top priority inthe state. For example, the whole
wind industry is big time in NewJersey maritime, and that's similarly for New
York AI. This whole disruptive natureof chat GPT, there's opportunities there,

(54:17):
and then the film industry positioning businessesto take advantage of that, helping them
get a line for capital investment,and engaging those who are leading those industries
that articulate to them using metrics andbest practices. That diversity is the best

(54:38):
way to get the returns of thedesire. Now, John, if I
could just jump in for a second, you touched on something that's so important
today's day and age, being mindfulof emerging technologies AI chat GPT. What's
your advice as running the African AmericanChamber of Commerce of New Jersey. How

(54:58):
important is it for a small businessand businesses of any size to be mindful
of the latest technology and to leverageit. Listen, if you're not embracing
technology, you're losing. Okay,I'm a I'm a I'm a pitted pad
type person, but they have slowlydragged me into being a little more of
leveraging technology. It's a game change, it's a disruptor. Is transformation to

(55:23):
you cannot be afraid of technology.It's like a good piece of finish.
You eat a good part and youthrow our way to bad. Oh,
it's great having you on and aslew of guess. Wow, We're at
a time. What an incredible showbrought to you by Citizens Tonight show the

(55:43):
Business Banking Update. Wow, We'reat a time, Mike, Thank you
for joining me on the set tobe back. Oh, what an incredible
show. The views and opinions expressin this program are those of the speakers
and do not necessarily reflect the viewsor positions of any of the entities they
represent. Citizens does not endorse orsponsor other products and services mentioned. Citizens

(56:05):
for Deposit Products member FDIC. Wellout of time, Tune in again next
Sunday night for another great additional Mindedbusiness Right here on seven ten WR,
the Voice of New York have asuccessful week. Seven ten War and the
iHeart Radio Network present Mind Your Business, hosted by the president of bottom Line

(56:27):
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(57:22):
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