PROVIDENCE — The chief credit officer of a Rhode Island bank and a U.S. Small Business Administration official advised businesses owners not to panic during the continuing credit crunch that has company executives worried around the world.

“Take a deep breath,” said James Vesey, president and chief credit officer at Washington Trust Co. “Look at it as an opportunity.”

Vesey and Mark Hayward, director of the SBA office in Rhode Island, both said there are tactics that small businesses can use to survive and to prosper in the current economic turmoil. They offered their advice yesterday during the monthly meeting of the Small Business Advocacy Council at the Rhode Island Economic Development Corporation’s office in Providence.

Admittedly, Vesey said, it’s difficult for anyone to know with certainty what course to take through the financial maelstrom.

“We’re in uncharted waters,” he said. “I’ve not seen anything like this in my business life and I’ve been at it for 38 years.”

Lt. Gov. Elizabeth Roberts, who moderated the session, said Rhode Islanders are perplexed about how to handle their finances.

“I think what people are feeling right now is . . . intense anxiety,” Roberts said. “These are questions that everyone is talking about.”

First on the list of tactics for businesspeople is to assess their business to make sure money is being spent efficiently, cut expenses, keep only enough inventory to satisfy the known demand, pay the bills on time but don’t use personal credit cards to pay them, and talk to lenders before a business gets too deep into a financial hole — lending agencies may know of ways to trim costs and may be willing to extend loan due dates, the two speakers agreed.

“All small businesses have problems,” Vesey said. “When you do have problems, raise the issue with the bank; you’re more likely to get help if you touch base early on.”

Hayward concurred.

“You can’t go into the fetal position and not do anything,” he said.

Washington Trust sees opportunities in the current market, having raised nearly $50 million in a private stock offering, Vesey said. The Westerly-based bank intends to use the proceeds from the capital raised for general corporate purposes and for strategic growth initiatives in its commercial and wealth management business lines, he added.

Conversely, the number of businesses applying for loans guaranteed by the SBA took a “precipitous” dip across the nation this year, Hayward said, dropping 30.7 percent from 99,000 applications in the period of Oct. 1, 2006 to Sept. 30, 2007 to 69,000 in same period ending last month.

“Some companies are leery of taking out new debt,” Hayward said. “The question is: ‘When are people going to come back to the table?’ ”

J. Michael Saul, deputy executive director of the EDC, said Rhode Island banks are ill-prepared to understand the business models and financing needs of some of the state’s newest companies, which base their value on “soft” assets such as intellectual property, brands and proprietary software programs.

“I don’t think the small banks can satisfy the capital requirements of this state,” Saul said.

According to Hayward, banks should abandon the guideline of basing commercial loan amounts on a company’s collateral — securities whose value may be unverifiable. Instead, he said, financial institutions should return to a traditional benchmark for setting commercial loans — cash flow. (Cash flow is the amount of money being transferred into and out of a business.)

Edward Mazze, distinguished university professor of business administration at the University of Rhode Island, said good things are coming out of the national debate about finances.

The United States learned its part of the global economy, he said, and “we’ve all become more financially literate.”

Saul, the EDC’s deputy director, took that assessment further.

“These recessions are good, there’s a cleansing,” he said, of balance sheets and businesses.

Near the meeting’s end, Phil Papoojian, president of Mereco Technologies Group, a chemicals manufacturer in West Warwick, returned to Vesey’s initial advice.

“The fundamentals behind this [economic turn] are not going to affect small businesses. . . .Stay the course,” Papoojian said.

pgrimald@projo.com