Hartford Business Journal

8 Hartford Business Journal • May 11, 2015 www.HartfordBusiness.com FOCUS BANKING & FINANCE Q&A Optimism spurs increased commercial-loan demand Q&A talks about the commercial lending environment with Peo- ple's United Bank executives Mar- jan Murray, executive vice presi- dent, commercial real estate; Jack Bundschuh, executive vice presi- dent, commercial and industrial; Jeff Tengel, senior executive vice president, commercial. Q: People's United Bank saw a 5 percent annu- alized increase in its $27 billion loan portfolio dur- ing the first quarter compared to the end of the fourth quarter 2014, with most of that growth coming from com- mercial loans. Com- mercial lending nationwide is on the upswing. What drove commercial loan demand in the first quarter, and do you expect the trend to continue the rest of this year? TENGEL: While the first quarter is typically a season- ally slower period, we achieved solid annu- alized loan growth of $337 million, marking the 18th consecutive quarter of loan growth for People's United. As in previous quarters, growth was well-balanced from a product and geo- graphic perspective. Construction & Indus- trial (C&I) contribut- ed $240 million of the total originated loan growth while com- mercial real estate contributed $118 million. Within C&I, we experienced par- ticular strength in our mortgage warehouse lending business. Q: Which com- mercial borrowers (small, midsize, or large companies) are driving most of the loan demand? Is there a particu - lar industry most in need of credit? What are commercial bor- rowers using the money for? MURRAY: In Con- necticut commercial real estate (CRE), People's United is a solid middle-market lender. The market exhibits continued loan demand, particularly in multi-fam- ily housing with funds raised going toward additional acquisitions, construction and refinances. BUNDSCHUH: We have seen improving loan demand from both small and large companies and spread across market seg- ments from service to manufac- turing to education and health care. As the economy continues to rebound, companies are more willing to invest in expansion, whether through acquisition or capital investment. Q: How has the commercial lend- ing environment changed today com- pared to 5 or 6 years ago? Have credit/ underwriting stan- dards shifted? MURRAY: With CRE there is a lot of liquidity in the market, not only from banks, but from non-bank lenders like insurance and commercial mort- gage-backed securities lenders. Spreads are tightening and lenders are getting creative, while maintaining standards. BUNDSCHUH: The competition for qual- ity loan opportunities has been fierce, as both banks and non- banks seek to deploy funds. The challenge to book quality loans at reasonable spreads in this environment requires differen - tiation. Another very significant challenge in the current lending environment is the increased amount of oversight on the part of regulators. Q: How is the threat of higher interest rates impacting compa- nies' decisions to take on or not take on debt? B U N D S C H U H : We have been in an ultra-low rate environ- ment for several years now. Still, companies have been very cau- tious about taking on additional debt. As business confidence returns and more companies become optimistic about their growth prospects, it is an optimum time to lock in financ- ing at historically low rates. MARJAN MURRAY Executive vice president, commercial real estate, People's United Bank JACK BUNDSCHUH Executive vice president, commercial and industrial, People's United Bank JEFF TENGEL Senior executive vice president, commercial, People's United Bank Virtual incubator helps startups learn crowdfunding ropes By John Stearns jstearns@HartfordBusiness.com M anolis Sfinarolakis wants to help entrepreneurs around the world turn their ideas into reality through successful crowdfunding. His business, Reality Crowd TV Media Corp., devel- oped a virtual incubator that links entrepreneurs via an Internet community to the education they need to prepare themselves for raising money from online investors. The site, called the Virtual Incubator and Crowdfund- ing Network, or VICN, isn't another crowdfunding plat- form, said Sfinarolakis, 31. Entrepreneurs can't raise money on it. Instead, the virtual incubator serves as a pre-launch platform for entrepreneurs to prepare themselves to raise money on another site, like Kick- starter and others. The company was just named among 32 regional finalists nationally in Comcast's Innovations 4 Entrepreneurs contest, winning $10,000 to fur- ther develop its online platform. Six finalists will win an additional $20,000 based on online public vot- ing through May 10. A UConn accounting graduate who grew up in Woodbury and rents an office in Central Connecticut State University's Institute of Technology & Business Development building in New Britain, Sfinarolakis employs what he calls the nine stages of crowdfunding that, when completed, can help entrepreneurs launch a successful crowdfunding effort in three-to-six months. VICN aggregates experts in those stages — which starts with business planning and includes protecting intellectual property, social media strategies, website development and more — in an online community where information can be shared, and questions asked and answered. Richard Swart, crowdfunding and alternative finance researcher and scholar-in-residence in the Institute for Business and Social Impact at the University of Califor- nia, Berkeley, is an unpaid adviser to Sfinarolakis and says he exemplifies what crowdfunding is about: seeing its potential, leaving his job as an auditor in the financial ser- vices industry and creating a community out of nothing. "He went out there and just did this," Swart says. "With the combination of our feedback and his passion, we hopefully can build a sustainable model that will help a lot of entrepreneurs." Swart says it's ironic in a crowdfunding universe that there's not a lot of crowd mentoring or crowdsourcing of ideas, adding that Sfinarolakis is addressing that by trying to create a networking/training site to aggregate reliable information and connect entrepreneurs to experts. "What he's trying to do is help people understand what it takes to be success- ful … what are all the steps, the necessary preparation and outreach and pre-cam- paign activities that lead to success," Swart says. That's where the crowd- funding stages come into play. Some people don't know what's involved for successful crowdfunding, Sfinarolakis says. Ray Fraser of Hartford appreciated the help he got for his startup, TreeSleeve, which makes coffee cup sleeves out of sugar cane bagasse that would oth- erwise be burned. Tree- Sleeve sales help pay for planting carbon-absorbing, soil-stabilizing mangrove trees around the world. "When we first started, [Sfinarolakis] was very instrumental in helping us with our Kickstarter cam- paign in terms of providing insight and advice when it came to crowdfunding," says Fraser, TreeSleeve's CEO. TreeSleeve was partway through its Kickstarter cam- paign and raised about $65,000 when it learned it needed more money. It halted the campaign and subsequently received an investment offer Fraser is now finalizing. While the Kickstarter funds won't be needed, the campaign raised awareness of the company and its product, Fraser says. Sfinarolakis is also helping TreeSleeve with its social media strategy, Fraser says. Manolis Sfinarolakis is developing his Virtual Incubator and Crowdfunding Network in an office at Central Connecticut State University's Institute of Technology & Business Development building in New Britain. Continued Continued H B J P H O T O S | J O H N S T E A R N S

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