What COVID reminds us about bank relationships
The Paycheck Protection Program is a loan to help small businesses and nonprofits keep their workforce employed during the COVID-19 crisis.
We’ve heard from small businesses and nonprofits about how the process has gone. We’ve distilled this feedback into three things organizations are being awakened to.
1 - Bank relationships matter… in times of crisis, and before a crisis
In the ever-globalizing, digital world we all live in, more and more of our relationships are becoming transactional. Not having to talk to someone is sometimes seen as a benefit of convenience.
But when things go wrong -- unforeseen things -- like a global pandemic or even a business financing hurdle or roadblock, it means everything to be able to turn to trusted relationships that have our backs to help our organizations manage through troubled times.
The top suggestion for organizations interested in applying to the Paycheck Protection Program has been to reach out to your current bank, first, to see if they can process your application, or refer you to someone who can.
Many organizations have been upset, however, at how their current bank handled their application request. Some organization’s emails went unanswered. Some sat on hold on the phone, never to have a bank lender pick up. Some organization’s questions were glazed over… and punted forward. Some organizations were told: we cannot process your application… try googling another bank.
Leaders at these small businesses and nonprofits just wanted a trusted relationship they could turn to.
When things go wrong, you get a phone call to make. When it comes to managing your organization’s finances, being able to call a bank that you have a real relationship with is the difference between your feeling assured that someone is looking out for your organization’s interests and will go above and beyond for you, versus feeling like you’re left hanging, dangling in the wind, more vulnerable than you’d like to be.
To be sure, all banks are totally backlogged in their processing of PPP applications. The program is, in effect, a cash grab. And it’s new. And it’s emerging during a global crisis. No matter what bank you turn to, they will be saturated with inquiries and pleas for help.
But what’s different is how banks treat you. To be able to pick up the phone and talk to a person who knows your business, and knows you, and personally assures you that they will take care of you, is the sort of concierge-level service that any organization would ideally want.
2 - Get the PPP loan you need, now, and work on the bank relationship you want, ongoing
If your current bank can process your application: get your application processed.
If your current bank can’t process your application: find a bank, credit union or other approved SBA 7(a) lender to process your application.
Ideally, you’d be able to find a relationship bank or credit union that would be willing to take your business or nonprofit on as a customer. While all banks are focused on serving existing customers first, many banks (especially the community-focused ones) are hustling to be able to serve new clients who are located in the markets where they lend, and/or who work within a sector that the bank is specialized in serving (like sustainability, or cooperatives, or small farms). If you want more than just a bank to run a PPP application for you --- if you’re really looking for a bank relationship -- banks will be receptive to go above and beyond for you.
If you just need your application processed fast, you may need to reach out to a handful of banks before you find one that will process your application.
Submit your application via an online lender like those below may be a fine idea. After you submit your application, consider prioritizing that you have a relationship bank. And move your organization’s business there.
Sunrise Banks (see Mighty profile here, and PPP application here)
Radius Bank (Mighty profile, here, and PPP application, here)
Kabbage (a lending service that will assign your application to an SBA lender (bank or otherwise), PPP application here)
3 - Pay attention to what banks do, not what they say
People have shared stories with us about how their bank denied their application, even though they had millions of dollars in deposit accounts with the bank, or have been a customer for decades.
These same people then shared how they turned to banks that were focused on serving local communities, and were impressed to see the new bank not only take on their PPP application and other bank accounts, but also work nights and weekends to get the job done.
Some of these people were later contacted by their old bank, to try to make up for a previously bad experience.
But experiencing the level of service that a bank could offer — when times were hard — spoke volumes. Who knew it was even possible to have a bank director email you at midnight on a Friday to assure you that your business was being taken care of.
Look at what banks do, not at what they say, and choose your relationships by this standard. Look at what the bank does with its (aka your) money. Look at what the data says is the bank’s true focus. Experience how a bank treats you, when times are good, and when times are tough. Make your decision in a bank based on these attributes.
Read how banks are supporting their customers during the COVID-19 crisis.