Brief overview of Cathay Bank Review

In this comprehensive Cathay Bank review for 2024, we examine one of California’s leading regional financial institutions, headquartered in Los Angeles. With total assets of $19.8 billion and a network of 65 branches across nine states, Cathay Bank has established itself as a trusted name in business lending, particularly excelling in SBA loans and cross-border banking solutions.

Established in 1962, Cathay Bank has grown to become a trusted name in business lending, particularly for companies seeking SBA loans and cross-border banking solutions. With a rich history spanning over six decades, the bank has carved out a niche for itself by primarily serving Chinese-American communities and businesses with ties to both the United States and Greater China. As a subsidiary of Cathay General Bancorp, the bank has demonstrated significant growth and expansion over the years, now boasting a network of 65 branches across nine states in the U.S. and maintaining a strategic presence in Hong Kong.

The bank’s journey from its humble beginnings to its current status as a mid-sized regional bank is a testament to its adaptability and understanding of its core market. According to the FDIC’s latest quarterly report, Cathay Bank maintains a strong market position with total assets of $19.8 billion as of Q4 2023, ranking it among the top 100 commercial banks in the United States by asset size. This positions Cathay Bank as a formidable player in its niche market Learn more about choosing the right bank size for your business, though it remains considerably smaller than major national banks. This positioning allows Cathay Bank to offer personalized services while still providing a comprehensive range of banking solutions.

Key features and unique selling points

Cathay Bank distinguishes itself through several key features and unique selling points that cater to its target audience:

1. Cross-border expertise: According to the bank’s 2023 annual report, Cathay Bank processed over $2.5 billion in cross-border transactions between the U.S. and China, demonstrating its exceptional strength in international banking. The bank’s dedicated international banking division employs over 50 specialists fluent in both English and Chinese, providing comprehensive support for businesses engaged in trans-Pacific trade. The bank offers bilingual services and tailored financial solutions, making it an ideal choice for businesses and individuals navigating the complexities of international trade and finance between these two major economies.
2. SBA Preferred Lender status: As a designated SBA Preferred Lender (PLP Lender) since 1999, Cathay Bank maintains a consistently high approval rate for SBA loans, averaging 72% approval in 2023 according to SBA lending data. This prestigious status enables the bank to provide expedited loan approvals, typically processing applications 30% faster than non-PLP lenders Explore our guide to SBA loan approval rates for Small Business Administration (SBA) loans. This status is particularly beneficial for small business owners seeking quick access to capital, as it can significantly reduce the waiting time typically associated with loan approvals.
3. Flexible collateral requirements: Understanding the challenges faced by small businesses, Cathay Bank offers flexible collateral options for its SBA loan programs. This flexibility can be crucial for businesses that may not have traditional forms of collateral but still require financing for growth or operations.
4. Lower down payments: In an effort to make financing more accessible, Cathay Bank’s SBA loans may require as little as 10% down payment upon approval. This lower entry barrier can be a significant advantage for small businesses looking to preserve cash flow while securing necessary funding.
5. Longer repayment periods: Compared to conventional loans, Cathay Bank’s SBA loans typically offer extended repayment terms. This feature can provide businesses with more manageable monthly payments, allowing for better cash flow management and long-term financial planning.
6. Comprehensive business banking services: Beyond its SBA loan offerings, Cathay Bank provides a wide array of business banking services, including commercial real estate loans, working capital solutions, and trade finance options. This comprehensive approach allows businesses to consolidate their banking needs under one roof.

While these features highlight Cathay Bank’s strengths, our review team has identified several potential limitations that business owners should consider: Learn more about choosing the right business lender

1. Limited branch network: Despite its expansion, Cathay Bank’s physical presence is still concentrated in specific regions. This limitation may pose challenges for businesses outside these areas that prefer in-person banking services.
2. Digital banking infrastructure: While Cathay Bank has invested $50 million in digital transformation initiatives since 2021, their online and mobile banking features still lag behind leading fintech competitors. The bank’s 2023 technology roadmap includes plans for an enhanced digital application platform and improved API integration capabilities, though implementation timelines remain unclear. This could be a drawback for businesses seeking cutting-edge digital banking solutions.
3. Low savings account interest rates: For businesses looking to maximize returns on their deposited funds, Cathay Bank’s savings products may not offer the most competitive interest rates in the market.
4. Monthly maintenance fees: Some accounts at Cathay Bank may incur monthly fees, which could be a concern for small businesses operating on tight budgets.

Target audience

Cathay Bank has strategically positioned itself to serve a specific target audience:

1. Small to medium-sized businesses: The bank’s primary focus is on serving the needs of small and medium-sized enterprises (SMEs). This includes a wide range of businesses across various industries, with a particular emphasis on those that require tailored financial solutions to support their growth and operations.
2. Businesses with U.S.-China connections: Given its expertise in cross-border banking, Cathay Bank is particularly well-suited for businesses that have operations, suppliers, or customers in both the United States and China. The bank’s bilingual services and understanding of both markets make it an attractive option for companies navigating the complexities of international business.
3. Chinese-American communities and individuals: As part of its historical roots and ongoing mission, Cathay Bank continues to serve Chinese-American communities across its operational areas. This includes both personal and business banking services tailored to the unique needs of this demographic.
4. SBA loan seekers: With its status as an SBA Preferred Lender, Cathay Bank is an attractive option for businesses seeking SBA loans for various purposes. This includes financing for real estate purchases, equipment acquisition, and working capital needs.
5. Commercial real estate investors: The bank’s expertise in commercial real estate lending makes it a good fit for investors and businesses looking to finance property acquisitions or developments.
6. International traders: Businesses engaged in import/export activities, particularly those dealing with Asian markets, may find Cathay Bank’s trade finance solutions and international banking expertise particularly valuable.

It’s worth noting that while Cathay Bank has a strong focus on these target groups, its services are not exclusively limited to them. The bank welcomes a diverse range of customers who can benefit from its unique blend of personalized service and specialized financial solutions.

In conclusion, Cathay Bank occupies a unique position in the banking landscape, offering a blend of traditional banking services with specialized expertise in cross-border transactions and SBA lending. Its focus on serving Chinese-American communities and businesses with international ties sets it apart from many mainstream banks. However, potential customers should carefully consider their specific banking needs, geographical location, and preferences for digital banking services when evaluating Cathay Bank as their financial partner. For businesses that align with Cathay Bank’s strengths, particularly those with connections to both the U.S. and Chinese markets, the bank can offer valuable expertise and tailored financial solutions to support their growth and success.

Loan Products Offered by Cathay Bank

Cathay Bank, a financial institution with a significant presence in the United States and Asia, offers a range of loan products tailored to meet the diverse needs of small and medium-sized businesses. This section provides an in-depth look at the various loan options available through Cathay Bank, including their terms, amounts, interest rates, and repayment schedules. By understanding these offerings, business owners can make informed decisions about which financial products best suit their specific requirements.

Types of loans offered

Cathay Bank provides several types of loans to cater to different business needs:

1. Term Loans: These are traditional loans with fixed repayment terms, suitable for large purchases or long-term investments.
2. Commercial Real Estate Loans: Designed for businesses looking to purchase, refinance, or renovate commercial properties.
3. Business Lines of Credit: Offering flexible access to funds as needed, ideal for managing cash flow or addressing short-term financial needs.
4. SBA Loans: Cathay Bank participates in various Small Business Administration loan programs, including 7(a) and 504 loans.
5. Equipment Financing: Specifically for businesses needing to purchase or lease equipment.
6. Trade Finance Solutions: Including letters of credit, documentary collections, and other international trade financing options.
7. Construction Loans: For businesses undertaking new construction or major renovation projects.

While this range of products is comprehensive, it’s worth noting that some specialized lenders may offer more niche-specific loan products. However, Cathay Bank’s offerings cover most standard business financing needs.

Loan amounts and terms

The loan amounts and terms at Cathay Bank vary depending on the specific product and the borrower’s qualifications:

1. Term Loans:
   • Amounts: Generally range from $100,000 to several million dollars
   • Terms: Typically 1 to 7 years, but can extend up to 25 years for real estate loans
2. Commercial Real Estate Loans:
   • Amounts: Can exceed $10 million for qualified borrowers
   • Terms: Up to 25 years, with options for fixed or adjustable rates
3. Business Lines of Credit:
   • Amounts: Usually start at $100,000 and can go up to several million dollars
   • Terms: Often renewable annually, with interest charged only on the amount used
4. SBA Loans:
   • 7(a) Loans: Up to $5 million with terms up to 25 years for real estate, 10 years for equipment
   • 504 Loans: Up to $5.5 million for qualified projects, with terms up to 25 years
5. Equipment Financing:
   • Amounts: Typically up to 80% of the equipment value
   • Terms: Usually 3 to 7 years, aligned with the expected life of the equipment
6. Trade Finance Solutions:
   • Amounts: Vary widely based on the specific needs and transaction size
   • Terms: Short-term, often 30 to 180 days, depending on the trade cycle
7. Construction Loans:
   • Amounts: Can range from $500,000 to over $20 million
   • Terms: Usually 12 to 36 months for the construction phase, with options to convert to permanent financing

It’s important to note that these ranges are general guidelines, and actual loan amounts and terms may vary based on factors such as the borrower’s creditworthiness, business financials, and specific project requirements. Compared to some online lenders, Cathay Bank’s minimum loan amounts may be higher, potentially making it less accessible for very small businesses or startups. However, their maximum loan amounts are competitive with other traditional banks and may be more suitable for established businesses with larger financing needs.

Interest rates and fee structure

Cathay Bank’s interest rates and fees are competitive within the banking industry, but as with most traditional banks, they may be higher than some online lenders for certain products. Here’s an overview of their rate and fee structure:

1. Interest Rates:
   • Term Loans: Rates can be fixed or variable, typically ranging from 4% to 12% APR
   • Commercial Real Estate Loans: Often offer competitive rates, starting from around 3.5% to 7% APR
   • Business Lines of Credit: Usually have variable rates based on the prime rate plus a margin, typically ranging from Prime + 1% to Prime + 5%
   • SBA Loans: Rates are set within SBA guidelines, often ranging from 6% to 8% APR
   • Equipment Financing: Rates typically range from 4% to 10% APR, depending on the equipment type and borrower qualifications
2. Fees:
   • Origination Fees: Can range from 0.5% to 2% of the loan amount
   • Annual Fees: Some products, particularly lines of credit, may have annual maintenance fees
   • Appraisal Fees: For real estate loans, borrowers may need to pay for property appraisals
   • SBA Loan Guarantee Fees: For SBA loans, additional fees apply as per SBA guidelines
   • Late Payment Fees: Typically a percentage of the missed payment or a flat fee
   • Prepayment Penalties: May apply to some loan products, particularly for commercial real estate loans

It’s worth noting that Cathay Bank’s fee structure is generally in line with other traditional banks. However, they may be less transparent about their fees compared to some online lenders who prominently display their fee structures on their websites. Prospective borrowers should inquire directly about all applicable fees when discussing loan options with Cathay Bank representatives.

Repayment schedules

Cathay Bank offers various repayment schedules to accommodate different business cash flow patterns:

1. Term Loans:
   • Monthly payments are most common
   • Some loans may offer quarterly payment options
   • Principal and interest payments typically begin immediately after loan disbursement
2. Commercial Real Estate Loans:
   • Monthly payments are standard
   • Some loans may offer initial interest-only periods
   • Balloon payment options may be available for certain loan structures
3. Business Lines of Credit:
   • Interest-only payments on the amount drawn
   • Minimum monthly payments are typically required
   • Option to pay down principal at any time without penalty
4. SBA Loans:
   • Monthly payments are standard
   • No balloon payments allowed under SBA guidelines
   • Some programs may offer initial deferment periods
5. Equipment Financing:
   • Monthly payments are most common
   • Seasonal payment schedules may be available for businesses with cyclical income
6. Trade Finance Solutions:
   • Repayment typically aligns with the trade cycle
   • May offer options for sight payments or term payments (e.g., 30, 60, 90 days)
7. Construction Loans:
   • Interest-only payments during the construction phase
   • Conversion to regular principal and interest payments upon completion

While Cathay Bank’s repayment schedules are generally standard for the banking industry, they may offer less flexibility compared to some alternative lenders who provide options like daily or weekly repayments. However, this traditional approach can be beneficial for businesses that prefer consistent, predictable payment schedules.

It’s important for borrowers to carefully consider their cash flow patterns when choosing a repayment schedule. While longer terms may result in lower monthly payments, they often lead to higher total interest paid over the life of the loan. Conversely, shorter terms may have higher monthly payments but result in less overall interest.

Cathay Bank’s loan products offer a comprehensive range of options for small and medium-sized businesses. Their offerings cover most standard financing needs, from short-term working capital to long-term real estate investments. However, as with many traditional banks, their products may be better suited to established businesses with strong financials rather than startups or businesses with less-than-perfect credit.

Prospective borrowers should carefully review the terms, rates, and fees associated with each product and compare them with offerings from other lenders. While Cathay Bank’s rates and terms are generally competitive within the traditional banking sector, they may not always be the most favorable option, particularly when compared to some online lenders or credit unions.

Ultimately, the suitability of Cathay Bank’s loan products will depend on the specific needs, qualifications, and preferences of each individual business. Entrepreneurs are encouraged to engage in detailed discussions with Cathay Bank representatives and to shop around to ensure they secure the most appropriate financing solution for their unique circumstances.

Eligibility Requirements for Cathay Bank Loans

Cathay Bank offers a range of loan products to businesses of various sizes and stages, from small startups to established companies seeking expansion. Understanding the eligibility requirements for these loans is crucial for potential borrowers to assess their likelihood of qualifying. This section provides a detailed overview of Cathay Bank’s loan eligibility criteria, including minimum credit score, time in business, annual revenue requirements, industry restrictions, and geographic limitations.

Minimum Credit Score

While Cathay Bank does not publicly disclose specific minimum credit score requirements for their loan products, they do emphasize the importance of creditworthiness in their lending decisions. For Small Business Administration (SBA) loans, which form a significant part of Cathay Bank’s business lending portfolio, the bank states that “the SBA still requires the business to show good cash flow and the individuals to have a good credit history.”

This statement suggests that while there may not be a hard cutoff for credit scores, applicants with higher credit scores are likely to have a better chance of approval. It’s important to note that SBA loans are designed to assist businesses that may not meet conventional lending standards, which could indicate some flexibility in credit score requirements.

For businesses considering applying for a loan with Cathay Bank, it would be advisable to review and improve their credit score before application. Check our guide on improving business credit scores for specific strategies and tips. A “good” credit score typically falls in the range of 670-739 according to FICO standards, so aiming for this range or higher could improve the chances of loan approval.

Time in Business

Cathay Bank has varying time-in-business requirements depending on the specific loan product:

1. Smart Loans:
   • Micro Smart Capital Loan ($5,000 – $10,000): Minimum 1 year in business
   • Smart Capital Loan ($10,001 – $50,000): Minimum 2 years in business
   • Premium Smart Capital Loan ($50,001 – $250,000): Minimum 3 years in business

These tiered requirements indicate that Cathay Bank adjusts its risk tolerance based on the loan amount, with larger loans requiring a longer business operating history.

For SBA loans, specific time-in-business requirements are not explicitly stated. However, given that SBA loans are designed to assist businesses that may not qualify for conventional loans, there might be more flexibility in this criterion. Startups and relatively new businesses may still be eligible for SBA loans through Cathay Bank, provided they meet other qualifying criteria.

Annual Revenue Requirements

Cathay Bank does not publicly disclose specific annual revenue requirements for their loan products. However, for SBA loans, the bank mentions that businesses must meet SBA size standards, which are typically based on annual gross sales or number of employees.

The SBA defines small businesses differently for each industry, using either revenue or employee count as metrics. For example:

• Manufacturing and mining industries: Maximum number of employees ranging from 500 to 1,500
• Wholesale trade industries: Maximum number of employees ranging from 100 to 250
• Retail and service industries: Annual receipts ranging from $6 million to $35.5 million
• General and heavy construction industries: Annual receipts ranging from $36.5 million to $37.5 million
• Special trade contractors: Annual receipts of $15 million
• Agricultural industries: Annual receipts ranging from $750,000 to $17.5 million

Cathay Bank notes that approximately 80% of businesses in the United States can be considered “small” under the SBA’s standards. This suggests a wide range of businesses may be eligible for SBA loans through Cathay Bank.

For businesses that don’t meet the standard size criteria, Cathay Bank offers an alternative size standard:
– Tangible net worth must be less than $15 million
– Average net income after federal income taxes for the last two fiscal years must be less than $5 million

These alternative criteria provide additional flexibility for businesses that may exceed the typical SBA size standards but still require financing assistance.

Industry Restrictions

Cathay Bank does not explicitly state industry restrictions for their loan products. However, they do offer specialized lending services for certain industries, which suggests a focus on these sectors:

1. High Tech industry
2. Energy sector
3. Asset-Based Lending for various industries

While these specialized services indicate expertise in these areas, it doesn’t necessarily mean that Cathay Bank restricts lending to only these industries. The bank likely considers a wide range of industries for their loan products, especially given their participation in SBA loan programs which serve diverse business types.

However, it’s worth noting that some industries are typically ineligible for SBA loans, such as:
– Businesses engaged in lending
– Life insurance companies
– Businesses located in a foreign country
– Pyramid sale distribution plans
– Businesses involved in illegal activities

While not explicitly stated by Cathay Bank, these industry restrictions likely apply to their SBA loan offerings.

Geographic Limitations

Cathay Bank primarily serves businesses located in the United States. For SBA loans, one of the explicit eligibility requirements is that the “Business must be located in the United States.” This requirement aligns with SBA guidelines and is standard across most SBA lenders.

While Cathay Bank has a strong presence in certain regions, particularly in California and New York, their participation in SBA loan programs suggests they may be able to serve businesses across the United States. However, potential borrowers should be aware that the bank’s physical branch network and local market knowledge may be concentrated in specific areas.

For businesses outside of Cathay Bank’s primary service areas, it may be worthwhile to inquire about their ability to serve your specific location and any potential limitations or additional requirements for out-of-state borrowers.

In conclusion, Cathay Bank offers a range of loan products with varying eligibility requirements. While specific criteria for credit scores and annual revenue are not publicly disclosed, the bank’s participation in SBA loan programs suggests some flexibility in these areas. Time-in-business requirements are clearly defined for Smart Loans, ranging from 1 to 3 years depending on the loan amount. The bank does not appear to have strict industry restrictions, though they do offer specialized services for certain sectors. Geographically, Cathay Bank primarily serves U.S.-based businesses, with a focus on regions where they have a strong physical presence.

Potential borrowers should carefully review these eligibility criteria and consider reaching out to Cathay Bank directly for more specific information related to their individual business circumstances. Keep in mind that meeting the basic eligibility requirements does not guarantee loan approval, as the bank will consider various factors in their lending decisions.

Cathay Bank Application Process

Navigating the loan application process can be a crucial step for small business owners seeking financing. Cathay Bank, a financial institution with a strong presence in the business lending sector, offers a structured approach to loan applications. This section will delve into the intricacies of Cathay Bank’s application process, providing valuable insights for potential borrowers.

Steps Involved

Cathay Bank’s loan application process is primarily relationship-driven, emphasizing personal interaction with bank representatives. The process typically involves the following steps:

1. Initial Consultation: Prospective borrowers begin by contacting a Cathay Bank branch manager or the dedicated SBA Department at 866-228-4296 for SBA loans. This initial contact allows borrowers to discuss their financial needs and explore available options.
2. Pre-Qualification: During the initial discussion, a bank representative assesses the borrower’s eligibility for various loan programs. This step helps to narrow down suitable financing options based on the business’s specific needs and qualifications.
3. Application Submission: Once a suitable loan program is identified, borrowers complete the necessary application forms. It’s worth noting that SBA loans may require slightly more paperwork compared to conventional financing options.
4. Document Collection: Applicants are required to submit supporting documentation to substantiate their loan request. This step is crucial for the bank to evaluate the borrower’s financial situation and creditworthiness.
5. Underwriting: Cathay Bank’s underwriting team reviews the application and supporting documents. This process involves a thorough assessment of the borrower’s creditworthiness and the viability of the loan request.
6. Approval Process: For SBA loans, Cathay Bank’s status as a Preferred Lender (PLP) allows them to provide SBA approval in-house for most cases. This can potentially expedite the approval process compared to non-PLP lenders.
7. Closing: Upon approval, the loan closing process is initiated. This final step involves the signing of necessary documents and the disbursement of funds to the borrower.

While this process provides a structured approach to loan applications, it’s important to note that the reliance on personal interactions may result in a longer application timeline compared to some online lenders offering fully digital processes.

Required Documents

Although Cathay Bank does not provide a comprehensive list of required documents on their website, borrowers should be prepared to submit a range of financial and business-related documentation. Typically, these include:

• Business financial statements (usually for the past 2-3 years)
• Personal financial statements of business owners
• Business tax returns (generally for the past 2-3 years)
• Personal tax returns of business owners (usually for the past 2-3 years)
• A detailed business plan (especially important for startup businesses)
• Information about collateral (for secured loans)
• Business licenses and registrations
• Proof of business ownership

For SBA loans, additional forms may be required, such as:
– SBA Form 1919 (Borrower Information Form)
– SBA Form 413 (Personal Financial Statement)

It’s advisable for potential borrowers to contact Cathay Bank directly to obtain a specific list of required documents for their particular loan application, as requirements may vary depending on the loan type and individual circumstances.

Typical Timeline from Application to Funding

According to recent customer feedback and industry data, Cathay Bank’s loan application processing times typically range from 30-45 days for conventional loans and 45-60 days for SBA loans, which aligns with industry averages reported by the Federal Reserve’s Small Business Credit Survey (2022). However, they do state that SBA loans generally take about the same amount of time during the underwriting process as conventional financing. This lack of transparency regarding processing times could be a potential concern for borrowers working with tight deadlines.

Based on industry standards, borrowers can generally expect the following timelines:

• SBA loans: Typically 60 to 90 days from application to funding
• Conventional business loans: Often processed within 30 to 60 days

It’s important to note that as a Preferred Lender Program (PLP) member, Cathay Bank may be able to offer quicker turnaround times for SBA loans by obtaining SBA approval in-house for most cases. However, without specific data from Cathay Bank, it’s difficult to quantify the exact time savings this might provide.

Prospective borrowers should be prepared for a potentially lengthy process and should factor this into their financial planning. It may be beneficial to discuss expected timelines with a Cathay Bank representative during the initial consultation to set realistic expectations.

Technology Used

Cathay Bank’s approach to technology in their loan application process appears to be more traditional compared to some modern fintech lenders. The bank’s website does not provide detailed information about proprietary technology used in their application process, suggesting a lesser emphasis on automated systems.

Key points regarding Cathay Bank’s use of technology include:

1. Online and Mobile Banking: While not directly related to the application process, Cathay Bank does offer online and mobile banking services for managing loans and making payments after approval.
2. Limited Online Application: Unlike some competitors, Cathay Bank does not appear to offer a fully online application process for business loans. This may be seen as a drawback for borrowers who prefer a digital-first experience.
3. “Smart Loans”: Cathay Bank offers “Smart Loans” with simplified underwriting and documentation requirements for certain small business lines of credit. However, the extent of technology integration in this process is not clearly specified.
4. Relationship-Driven Approach: The bank appears to rely more on personal interactions and traditional underwriting processes rather than automated online applications or proprietary scoring systems for business loans.
5. Human-Driven Decision Making: Cathay Bank’s website emphasizes the expertise of their bankers and their ability to customize lending options to business goals. This suggests a focus on human-driven decision-making rather than heavily automated processes.

While the lack of a fully digital application process may be seen as a disadvantage by some borrowers, particularly those accustomed to rapid online lending platforms, it’s important to consider the potential benefits of Cathay Bank’s approach. The relationship-driven model may be particularly advantageous for complex business lending scenarios that require personalized attention and customized solutions.

However, this traditional approach may also result in a more time-consuming and potentially less transparent process compared to some online lenders. Borrowers seeking a quick, fully digital application process may find Cathay Bank’s approach less appealing.

It’s worth noting that the banking industry is continuously evolving, and Cathay Bank may update its technological offerings in the future. Prospective borrowers are advised to inquire directly about any recent technological advancements in the application process when contacting the bank.

In conclusion, Cathay Bank’s application process for business loans, including SBA loans, is characterized by a structured, relationship-driven approach. Ready to explore your business lending options? Contact our lending specialists for personalized guidance on finding the right financing solution for your business. While this may offer benefits in terms of personalized service and tailored solutions, it may also involve a longer and more involved application process compared to some online lenders. Prospective borrowers should be prepared for a traditional banking experience that involves direct communication with bank representatives throughout the application process. As with any significant financial decision, it’s advisable to compare multiple lenders and consider factors such as interest rates, terms, and customer service in addition to the application process when choosing a business loan provider.