Joyce Smith is managing director, commercial banking at Bank of Nevada and has more than 30 years of experience in the banking industry. Joyce works directly with Bank of Nevada's CPA team, construction companies, small businesses, nonprofit organizations and others to help them meet their financial goals.
1) What are some of the challenges small and midsize businesses are facing currently?
Access to talented, qualified employees continues to be a big issue for many local businesses. Secondly, there is concern about inflation and rising interest rates and how that will affect business plans for the rest of this year and next year. There is also some apprehension related to the supply chain. We struggled with it during the pandemic. Some believe a law in California (AB-5) could make it more challenging for companies to classify truck drivers as independent contractors instead of employees. Some fear this could reduce the number of truckers available to deliver supplies from Southern California ports to the rest of the country. Beyond that, a business's ability to obtain all the credit they need is limited when interest rates go higher.
2) What are some of the industries in Southern Nevada that have been growing in the past 2 years?
We've been fortunate to see some growth areas. We've seen an influx of manufacturing companies coming into Nevada. In some cases, they are expanding their operations or relocating them entirely to our state.
Warehousing has been a strong segment as well. In terms of logistics, Nevada makes sense for many companies to base some of their warehouses as our state is well situated geographically, has access to the entire West coast, and is cheaper to do business. Gaming manufacturing companies continue to see Southern Nevada as the industry's epicenter and have continued to locate here. Overall, the migration from California, the world's 5th largest economy, continues to benefit Nevada.
3) How are you guiding clients in terms of how they should be operating in the current climate?
First, if you are a business owner, I highly recommend you make some time to speak with your banker about the current challenges. Your banker should know your business and should be able to make some recommendations.
I've been talking with my clients to determine if they have variable-rate loans. For instance, many commercial loans have a 10-year term but an interest rate that will readjust at five years. If they have a loan that adjusts next year, it could make a lot of sense to get them into a fixed rate loan now - before rates go up any higher. No one knows precisely where interest rates will be next year, but locking into a fixed rate now gives some protection against higher borrowing costs.
I also remind clients about the Small Business Administration (SBA) and its loan programs. For example, a 7(a) loan can be used for short-and long-term working capital, refinancing current business debt, or purchasing equipment or real estate. SBA loans typically have a longer repayment term which can also mean lower payments.