Banks moving at lightning speed
By John Asbury
A Goldman Sachs survey confirms more than half of U.S. small business owners say their business will not be able to continue operating more than three months due to the economic strain caused by the coronavirus pandemic. At least 10 million Americans applied for jobless benefits in the last two weeks of March.
The recent $2.2 trillion stimulus package included the passage of the U.S. Small Business Administration’s Paycheck Protection Program. The program gives small businesses potential access to a safety net to keep their workforce employed during the COVID-19 crisis. The SBA will forgive loans if all employees are kept on the payroll for eight weeks and the money is used for payroll, rent, mortgage interest or utilities.
Banks are now economic first responders and are being asked to play a major role in the delivery of the relief. Many financial institutions are moving heaven and earth to bring the specially structured SBA loan to market in record time.
Considering the speed this relief effort has launched and the dramatic demand, it is naturally fraught with challenges. The government approved the stimulus package on March 27, and the SBA moved fast. Banks were given a week to prepare and launch a 1-percent interest rate forgivable loan program, more closely resembling a grant. Many of the important loan details were not available until the night before the application process went live.
Atlantic Union Bank made the Paycheck Protection Program our priority last week, and at least half of our more than 2,000 employees are now involved with the program. We launched a new and complex lending product — something that typically takes months to do. We developed a new website and workflow infrastructure to accept and process applications, and our teammates are volunteering on weekends and after hours. These teammates are leading the charge with energy, enthusiasm and great pride to help our customers and communities. Since Friday, we received more than 5,000 applications for $1.2 billion dollars. The applications represent companies with a combined payroll of more than 216,000 workers.
While all banks are approaching this differently, we have the same goal in mind. The more small businesses we can help, the more Americans we keep employed and the stronger the recovery we can expect once this is over.
Since Friday, April 3, small businesses have been racing to apply for their share of $349 billion in forgivable loans. The financial industry is working diligently to manage the high volume of applications. I can attest to the unprecedented levels of confusion and frustrations, but our priority is to help. The most important thing a bank can do is accept applications from all customers, not just their borrowers or a privileged few, refine their processes to expedite approvals and continue to have empathy for their customers. The most important thing small business owners can do right now is apply.
- Essentially all small business owners who have 500 or fewer employees are eligible to apply.
- Business owners should contact their bank immediately. Not all banks are in a position to take their client’s applications and some have specific restrictions. Due to overwhelming demand, banks will understandably prioritize their own customers, and few have capacity to accept applications from noncustomers. So it is critical to learn now if your bank can help or if you need to find an alternative.
- The SBA has simplified the documentation required. Specific requirements are available on the SBA’s website or your bank’s application.
Banks cannot guarantee the SBA can fund all applicants. I cannot stress enough that if you are a small business, contact your bank now. This is an incredible lifeline for your company, and you should take advantage of it.
The unprecedented COVID-19 pandemic is the defining moment of our generation as we simultaneously face a health care crisis and an economic crisis, but not a financial crisis. Unlike the Great Recession, this time the American banking system is a part of the solution and not the cause of the problem. Speaking for our company, we will do our part to help, and we do not take that responsibility lightly.
John Asbury, Atlantic Union Bankshares president and chief executive officer, is a career banker with more than 30 years in commercial and corporate banking. Asbury was named chairman-elect of the Virginia Bankers Association, and he is slated to become the association’s chairman in June 2020.