NAB's general manager of group strategic business services, Tim Williams, dished up caution at the first day of hearings into small business lending by the Australian Small Business and Family Enterprise Ombudsman in Melbourne on Tuesday.The Financial Review covered these hearings, favourably, in a day kicked off by mea culpas from ANZ deputy CEO Graham Hodges and concessions to a hit list of reforms favoured by ASBFEO's annoyed and best organised customer sources.Hodges, the AFR reported, drew attention to proposals the bank supports that include sharing valuations and reports with the customer and extending the jurisdiction of the Financial Services Ombudsman to businesses with loans of up to A$3 million.ANZ also made it clear that it would support proposals to send small businesses reminder notices six months out from the expiry of a commercial loan and to give at least three months' notice when the bank decides not to roll over a loan.Williams shared further insights on banking biases.When asked about examples of non-monetary covenants that would put a small business into default, Williams named interest cover and loan to valuations ratios, but stressed these indicators were used internally to flag companies in trouble."The one that is most common is interest cover. If you have a ratio of say 1.5 [times] and they trigger that at 1.4 times, that's a default. At this stage you get the customer in and try and understand what's happened," Williams said."It may not necessarily move to the work out team. What we are now saying is that this needs a much more detailed and intense understanding. "These situations can run through pretty quickly to become a monetary default," he said.