Demand for loans stirs a bit

Its export and domestic markets booming, Ametherm Inc. was running out of space in its manufacturing facility in Carson City.

"We were at capacity last summer," says Eric Rauch, president of the maker of thermistors used in electric products ranging from battery chargers to big stadium speakers. "We could not build another part."

The upshot: Ametherm headed off to its bank, becoming one of a slowly growing number of companies in the region making applications for loans to finance growth.

Working with lenders at City National Bank, Ametherm nailed down Small Business Administration financing for a 34,000-square-foot building on Fairview Drive in southern Carson City, and it's nearly ready to move into the new building.

Along with more space, the new facility provides better power supply for the industrial ovens that are critical to its manufacturing process, Rauch says.

Larry Charlton, Nevada regional executive for City National, says manufacturing companies with a clearly defined niche such as Ametherm are among those that are beginning to visit with lenders.

Other sectors that are stirring to life, he says, are firms that are developing medical office buildings as well as law firms that successfully made the transition from the go-go real estate markets.

Nick Butler, a senior vice president with Umpqua Bank in Reno, says that business borrowers are talking with lenders but continue to be very cautious about taking on debt.

That continues a trend that began in the second half of 2011, when northern Nevada business began to see stabilization and some signs of improvement in their markets.

Still, they aren't rushing out to borrow money for expansion until they've looked closely at other strategies such as addition of a second shift in a manufacturing plant, Butler says.

"People are financing less than they in the past, and they are planning to use more cash," he says.

Businesses looking to borrow money for expansions today are typically those that moved quickly to weather the recession cutting jobs, reducing space, trimming costs as the first storm clouds developed, Butler says.

Those well-managed companies now are among the first to encounter limits to their capacity as the economy stabilizes, he says.

On the other hand, says Nevada State Bank's John Klaich, the companies that survived the recession often are in business today because they didn't have a lot of debt in 2007 and 2008.

"People are still very cautious, very nervous," says Klaich, a vice president and relationship manager with the bank in Reno.

Klaich says the bank sees some increased interest among potential borrowers who are looking at commercial real estate.

"They are seeing value, and there is a lot of money sitting on the sidelines," he says.

Klaich adds, however, that commercial borrowers who are returning to the market sometimes are surprised by the degree of additional regulation faced by banks as a result of the recession.

"The bankers are not the bad guys," he says. "We are doing everything we can to get the money into the economy."

Butler notes that the changing market means borrowers need to work more closely with their lenders to find a loan package that fits just right.

City National Bank, Charlton says, recently retooled its commercial lending operations in Nevada to put greater emphasis on working with customers whose companies post $20 million or less in annual revenues.

"We see that coming back more quickly than the really big companies," he says.