Buffalo developer Rocco Termini is keeping his fingers crossed that current Wall Street woes don't get in the way of his next project.
Termini, who wants to turn the former AM&A's warehouse on Washington Street into apartments and office space, has been on the phone with KeyBank more than once in the past week to gauge the prospects of getting the money he needs for the $11 million redo.
"Right now they tell me they're on board, but that doesn't mean the money will still be available one month or three months from now, when I make a final decision on the project," said Termini, who converts idle downtown industrial buildings into mixed-use buildings.
"The way things are going, they might not even be lending money for higher-risk projects like mine," he said.
Bank officials insist borrowers locally don't have to worry. "We're absolutely open for business," said Sterling Kozlowski, Western New York district president for KeyBank, a subsidiary of Cleveland-based KeyCorp.
"We're making loans. We're honoring our commitments to our client base, and we're interested in developing new relationships with qualified borrowers."
"Neither our appetite nor our ability to lend has changed. Our credit requirements have not changed either," said M&T Bank Corp. spokesman Michael Zabel. "We're still servicing our clients in Western New York, the vast majority of whom are small to mid-sized companies who rely on us for credit rather than on the capital markets."
As the subprime mortgage crisis ballooned into a full-blown meltdown that engulfed Wall Street and spurred a $700 billion financial industry bailout from the federal government, local executives like Termini are waiting to see how the fallout will affect their ability to borrow money through loans or lines of credit.
That funding is the lifeblood of many businesses, providing the funds they depend on for financing expansion projects, new product development and even the money that's needed to pay for day-to-day operations.
The rescue package that was approved by Congress on Friday is designed to reassure lenders, investors and others, and to free up the frozen flow of capital. But even with its passage, fears are growing nationally that the Wall Street crisis is sparking a potentially severe credit crunch, as cash-strapped or worried banks tighten their lending standards and make it harder for businesses to get loans and raise capital.
With money harder to come by, companies could be more apt to lay off workers and curtail spending, which would ripple throughout the economy as their customers and their employees are forced to cut back.
Like Termini, many Buffalo Niagara region executives said they are watching the credit markets closely, although most of them say their companies so far have not felt any sort of credit squeeze. But they are asking more questions of lenders to ensure money is there.
"I feel fortunate that it has minimal if any impact on us -- thankfully," said William McGowan, chief financial officer of AccuMed Technologies in Buffalo.
"So far, our company has not seen any change in the normal flow of business, and we haven't seen any of our customers complaining about any problem with credit or credit cards," said Rick Fish, founder and president of Complete Payroll Processing in Perry. "We haven't seen anything down to the local basis that is hurting anybody yet."
But that doesn't mean the situation won't change down the road. Already, machining and tooling company FlashFlo Manufacturing has seen vendors calling for payment in 30 days, instead of letting bills go for 45 to 60 days, president Lawrence J. Speiser said.
"Conditions change, so the future could be different as well, and you have to react to that in an appropriate way," Kozlowski acknowledged. "What I can tell you is that over time, we've been consistent. That's the best harbinger of the future."
That's not enough of a reassurance for everybody, though. On his past downtown projects, Termini has successfully paired conventional bank financing with alternative sources of money, such as government-backed historic, income-linked and New Markets tax credits to bring orphan buildings back to life. And he said he's built a good relationship with Key's Community Development lending arm.
"They aren't my only source, but I can't do these without them," he said. "This is not a good time to be borrowing money."
Local bankers said they remain ready and able to make business loans, although some say they have heard from new customers that large banks locally have cut back on credit lines or made it harder to get a loan.
"Bank of Akron has not cut back in business lending at all. We are having our busiest business lending year ever," said CEO E. Peter Forrestel II.
But he said one of his loan officers heard that some real estate developers have had their lines of credit pulled by other banks, who said they were getting out of housing financing.
"We're not seeing anything here, no effect," said Orrin Tobbe, CEO of Waterford Village Bank. "Our loan volume has been very good. Our pipeline is very good."
"We've stayed very consistent in the application of our disciplined underwriting standards across all of our product lines," said Scott Kingsley, chief financial officer of Community Bank System, which has 33 branches in Western New York.
"We have not cut back our commercial lending. In fact, we're headed towards a solid year with regards to growth and quality," said Jim Holding, spokesman for Northwest Bancorp in Warren, Pa.
"There's a lot of misconceptions out there, but there's no credit crunch here. We've got tons of money to lend," said Salvatore Marranca, president and CEO of Cattaraugus County Bank in Little Valley, whose loans have risen 10 percent since Jan. 1.
John R. Koelmel, president and chief executive officer of First Niagara Financial Group, said the Lockport-based thrift is as willing to make business and commercial loans as it ever has been. "Qualified borrowers have just as good of a chance of getting a loan as they did six months ago," he said.
David Rogers, the chief financial officer at Sovran Self Storage, says the credit crunch has had remarkably little impact on the self storage market.
The market prices of self storage facilities have been holding up for the most part, Rogers said, discouraging potential bargain hunters like Sovran, which during the spring arranged a complex financing deal with banks and a private equity firm to fund additional acquisitions.
Assembling that deal months ago, before the mortgage crisis had ballooned into a full-blown crisis enveloping Wall Street, was difficult, Rogers said. Now, it would be even harder to cobble together a similar arrangement.
Banks agreed. "New start-ups and typical high-risk business may find limited funding sources until banks have an opportunity to analysis the effects of the national crisis," said David Mancuso, president and CEO of Lake Shore Bancorp in Dunkirk. "I believe there may be some issues for large projects, but the typical well-run Mom-and-Pop type of business should have no problem obtaining financing."