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What does $349 billion in government funding look like for an individual small business? A lifeline, according to many of the small businesses that applied for loans through the first round of the Small Business Administration’s (SBA) Paycheck Protection Program (PPP).
For example, a recent Wall Street Journal article told the story of Mary Murphy Harrison, proprietor of concrete and gravel supplier Barney & Dickenson Inc. in Vestal, N.Y., who had laid off 15 people and cut hours for nine others due to COVID-19 impacts. The PPP loan she received from Tioga State Bank, a $471 million-asset institution in Tioga, N.Y., will help her reemploy those workers—exactly the intent of the program.
Leave it to community banks to get the money into the hands of those who need it. Holding valiant round-the-clock efforts, community banks around the country strove to fund as many small business loans as they could. In fact, a recent ICBA survey revealed that community bankers were able to fund upwards of 80 percent of all loans that came their way in this first round of PPP—or an average of 166 loans per bank.
Further, survey data shows community bank loans were reaching Main Street directly, with an average approved loan between $50,000 and $75,000. And SBA data further tells the story of community banks’ influence on the economy: Institutions with $10 billion in assets or less approved about 60 percent of loans in the first round, and 20 percent of the amount approved was processed by lenders with less than $1 billion in assets.
These statistics are amplified when we look to rural America. As the lender of over 70 percent of all agricultural financing from the commercial banking sector, community banks act as a cornerstone of rural communities.[1] Our survey revealed more than half (56.3 percent) of loans given were awarded by rural banks, ensuring that non-urban businesses were able to access PPP funds.
Putting the Community in Banking
The data speaks for itself. Community banks were able to secure funds for the majority of their customers, and small businesses took notice.
For example, John Sorrano, founder of Minneapolis-St. Paul’s Punch Pizza, pointed to the dedication of community banks in helping him to navigate the trials of COVID-19. “I feel so grateful to the small community banks that have been working around the clock to help small businesses,” he said.[2]
Or take Greenville, S.C.’s Ryan Hamilton, the owner of toy company Plus-Plus USA, who shared that his community bank made it possible for his company to keep its 20 employees working on creating “boredom busters” for quarantined kids. He thanked his bank for meeting this challenge head on and coming through for his business.[3]
And these are just two sample success stories; the list goes on and on. Each story speaks volumes to the drive of community banks: It’s not just about the business, but about the people behind it.
This sentiment becomes increasingly important as COVID-19 continues to ravage the economy. With unemployment numbers nearing Great Depression levels and small businesses on the brink of shutting doors, cash flow and payment issues will arise for a large portion of the population.
In fact, ICBA’s survey found that 67 percent of community bankers have already noted more mortgage forbearance requests from customers as a result of COVID-19, and 85 percent of banks are automatically granting these requests or asking for a quick verbal or written attestation of hardship, making it as simple as possible for customers to gain emergency financial relief.
Because in this difficult environment, for community banks, the relationship comes first. It’s about meeting customers where they are and helping them to thrive. As so many news reports and small businesses have noted of late, in times of financial trials, it’s time to get to know your local community bank.
Rebeca Romero Rainey is ICBA President and CEO.
[1] https://www.icba.org/news/news-details/2020/03/17/ag-policy-recommendations-to-congress
[2] http://tcbmag.com/news/articles/2020/april/from-record-sales-to-zero-revenue-what-punch-pizza-is-learning
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