Banks of all sizes, from small community institutions to regional and national banks, have been providing a lifeline for small businesses here in the Fort Worth-Dallas area and throughout the country during the pandemic.
Businesses from one-person operations to 1,500 employees comprise the small business classification according to the Small Business Administration.
The gross sales limit varies by industry and can be as high as $38.5 million.
The first two relief packages authorized by the Federal Government provided over $3 trillion of relief to the economy, with the two most business-focused platforms being the Payroll Protection Program (PPP) and Economic Injury Disaster Loan (EIDL).
PPP provided over $600 billion in forgivable grant loans to small businesses through the Small Business Administration, according to Charlie Powell, CEO of Ciera Bank, a 130-year-old community bank with eight locations.
“The PPP saved millions of jobs in the economy by injecting immediate money into small businesses, thus allowing them to keep employees on the payroll. Ciera Bank joined banks of all sizes to make the funds available in amounts determined by an SBA-provided calculation based on the number of jobs and total payroll within a company,” he said.
Doug Sanders, a Fort Worth-based banking consultant, worked with a large number of local businesses to secure the EIDL funding, which has totaled over $300 billion nationwide thus far.
He adds, “The EIDL loan process was quite complicated because of the massive number of dollars involved and the immediate crushing response of small businesses applying. The demand led to a second round of funding. Along the way, the SBA established a priority for the agriculture industry, which accelerated the timing for those loans to become approved, while moving the non-ag businesses farther down the line.”
The programs have led to some heartburn that had not been anticipated, according to Grandview Bank CEO Robert Stewart. His operation, with three locations, noted that the required record-keeping for the PPP loans was particularly onerous.
“We had one customer whose documentation required over 40 hours of diligence to complete his records. The banking industry was awash with complaints because customers were asking their bankers to perform the work of completing all the post-PPP paperwork. No bank had the resources to provide this additional service. We are anticipating that the Administration will respond to our vehement requests and agree to grant immediate loan forgiveness to all loans under $150,000 with minimal documentation,” Stewart said.
Mark Cundiff, Executive Vice President, Commercial Lending for Southside Bank says businesses should be prepared to gather information for a loan request.
“Business owners are the true experts on their particular business, so most financial institutions will look to them to first outline their loan request,” he said. “A written request is ideal and should include the purpose of the loan, along with the desired amount and terms. For businesses impacted by COVID-19, the purpose may be the need for working capital due to the effects on payroll or other areas of the business.
“Any business applying for a loan should also be prepared to provide business and guarantor financial statements and tax returns for the past two to three years, as well as entity documents. If the company is not yet established, projections will be requested for property value, revenue and other relevant figures depending on the request,” he said.
Bills have been introduced in both the Senate and House, and if passed, will offer blanket forgiveness on PPP loans, reducing the forgiveness process to a simple one-page attestation of compliance. In Texas, 86% of all PPP loans were $150,000 and under, so the legislation would dramatically ease the bureaucratic burden on small businesses and lenders alike.
More than $100 billion in leftover loan funding from the Paycheck Protection Program — relief money for small businesses — is up for grabs. Top advocates like Sen. Marco Rubio, R-Fla., are backing plans to ease some loan forgiveness rules and permit a second round of PPP payments to especially hard-hit businesses.
The economic hardship caused by the COVID-19 pandemic is not over yet, according to Frost Bank’s Shannon Watt, Executive Vice President at Frost Bank in North Richland Hills.
“Bankers continue to work beyond PPP and EIDL in serving customers’ needs. These programs have brought new customers to our banks, which have opened opportunities to help small businesses statewide,” Watt said.
The pandemic’s financial crisis continues to cause businesses to struggle.
Ciera Bank’s Powell adds, “Over 5,000 banks serve small businesses – as well as larger enterprises – and individuals throughout the United States. This pandemic has allowed customers to see how their banks have responded to a worldwide emergency. Relationships have been deepened and will benefit customers and their financial partners for years to come.”
– FWBP Staff