The Community Bank Is Where It’s At!

As our country deals with the economic chaos caused by the Covid-19 virus, Congress authorized the CARES act including the Paycheck Protection Program (PPP) in two bills totaling $659 billion.  The bills put PPP in the hands of financial institutions large and small to manage and disburse SBA loans that are forgiven if employers with less than 500 employees do not lay off their workers. Community banks have performed far better than Wall Street or other megabanks in disbursing the economic aid to small businesses and the public wants to know why.

I had a customer ask me if Wells Fargo was dragging its feet processing the 1% interest rate loans in hopes the program would run out of money and Wells could charge a higher rate of interest.  The answer is “No.”  There is nothing sinister in the way megabanks have handled PPP. It is just the way megabanks do business.

The risk of complying with the 100% SBA guaranteed loan rules is a concern to all banks.  If a bank doesn’t follow those rules, the government guaranty is not honored. To manage that risk, megabanks are developing software solutions to minimize human errors and develop training for their countless loan officers, while nimble community banks roll up their sleeves and focus on webinar training to gain the expertise to quickly get the money in the hands of needy business owners and employees.  Think of it as if there were a large cruise ship and a small speed boat sitting next to each other in a marina. Uncle Sam calls the captains of both vessels and informs them they need to a) stop what they are doing, b) turn their boat around and c) deliver a massive amount of money upstream to those citizens who qualify for a ride.  So the obvious question:  which boat can make that course correction faster?

There is a misconception that large megabanks and community banks are all the same.  We all have checking accounts, savings accounts, certificates of deposits and $250,000/depositor FDIC insurance.  The handling of PPP is a classic example of how Reliabank and other community banks can take care of their customers faster and with a more personalized touch.  Dealing with confusing websites and phone bankers 100-300 miles away is a great way megabanks can cut overhead.  But when customers are in desperate need because of a pandemic causing economic meltdown, they need to look to community banks like Reliabank to deliver before the Congressional funds run out.    

Learn More about SBA Funding here: