Designed as a way to help small businesses get through tough times, the Paycheck Protection Program quickly became a headache for many local entrepreneurs. Tight application deadlines and exhaustion of funds reports put pressure on entrepreneurs to prepare applications in record time.
While many large banks have struggled to keep up with the influx of requests for the Federal Assistance Program, community banks have been able to quickly shift their operations toward assisting their new and existing clients with their requests. .
Locally, community banks report that this help, at a time when businesses needed it most, won them favor with customers and even added a few new customers to their portfolios.
After submitting their applications, many applicants waited weeks without any updates from their financial institutions. If they made a mistake, there was no guarantee that they would have a chance to correct it before funds ran out, as the big banks struggled to contact individual applicants while taking care of day-to-day business.
The Small Business Administration has not shared any data on unsuccessful applications, making it difficult to determine how many applicants have not had their P3 loans approved and which financial institutions have processed their applications.
But published data on successful applicants shows the program has become a show of force for small local financial institutions.
For many local banks, the PPP application period was a situation where all stakeholders were involved.
“We made this the sole focus of our bank,” said Thomas ‘TJ’ Chavez, senior vice president and director of SBA sales at Tustin-based Sunwest Bank. His team recruited temporary staff to help process the applications, some of whom were then hired on a permanent basis.
“What we noticed was that the big banks weren’t able to act as quickly as Sunwest was,” Chavez said. “A lot of customers have felt really let down by their big banks right now.”
A total of 551 successful Long Beach applications were processed by financial institutions other than the nation’s top five retail banks. Citibank, one of the largest banks in the country, saw only eight successful applicants throughout the process.
Of 750 PPP requests in Long Beach that led to a loan issuance, 144 were processed by the locally based Farmers & Merchants Bank, making it the top local facilitator, ahead of national banks like Bank of America. , JP Morgan Chase and Wells Fargo. International City Bank, based in Long Beach, processed 16 successful applications.
“Regional and community banks are providing personalized solutions to their customers because we can,” said Henry Walker, President of Farmers & Merchants Bank.
During the small window of opportunity for PPP claim submission, Walker said everything was on deck, with staff working 18 hours a day to make sure their clients got a fair chance.
“We had to really jostle each other,” he said. But, he noted, “the team spirit was amazing.”
This could benefit the bank in more ways than one, by conquering new customers and bringing together its staff. “There’s a level of pride among the employee base that we’ve been able to step up as a first responder, as a hero, so to speak, for our community,” Walker said.
In the long run, Walker said he hopes clients’ positive experiences with community banks throughout this critical process will highlight some of the benefits of the local bank.
“Our industry is essential to the US economy because we are the banks that people can relate to and tell their stories,” he said. “And we will listen.”