Who is your banker? If you can answer that question with a name, a face, and better yet, contact information, then it's very likely that you were one of the 61% of small businesses that recently received a Paycheck Protection Program (PPP) loan through the SBA.
One thing that became clear to business owners during the pandemic and the resulting economic shutdown is the value of having a trusted relationship with your bank. While many people recently realized that it's possible to do all banking online, they also discovered the importance of having a banker they know and trust. During the disaster relief loan process, we saw too often that business owners who didn't have a relationship with a bank were left to fend for themselves in the PPP program, with little to no information about the status of their application.
According to the American Bankers Association, nearly 4.8 million loans were made to businesses nationwide during the PPP loan program for a total of $518.9 billion (as of June 27). Lenders with less than $10 billion in assets accounted for 44% of all PPP loans, while lenders between $10 billion and $50 billion accounted for 19% and institutions with more than $50 billion in assets accounted for 37%.
What that tells us is that community banks stepped up to complete almost half of all PPP loans. Community bankers live and work inside your community. They care about what happens to the corner store, the local restaurant, and the fitness center because they patronize those places too. And they very likely know the business owner and their families if they are a banking customer. This is relationship banking, which may have seemed like a quaint notion six months ago, but is now the key to survival for many small businesses.
For community banks, banking is not a commoditized business. Stories of community bankers at smaller institutions staying up all night to submit loan applications filled our recent social media feeds. Would bankers go to such great lengths for someone they considered "just a number?" Likely not. It goes back to the trusted relationship that banking requires -- and this cuts both ways. As a customer, you should vet your bank in the same way that a bank is vetting you.
• Do you have a trusted person at your bank who you can call when you need something?
• Is your bank responsive and transparent in good times and bad?
• Is your bank a partner in your business and invested in your success?
• Is your bank willing to introduce you to other customers who could help grow your business?
These are all foundational aspects of what it means to be a community bank -- and the basis of why you should consider your banking relationship as carefully as you consider any other business relationship. It's imperative to your success.
Thousands of small businesses that would have otherwise closed during our economic shutdown were able to weather the storm thanks to the partnership between banks and the SBA. With the PPP program now slated to extend into August, more small businesses will survive. The number of jobs and companies saved by these measures will help our economy return to full strength as soon as we are able so we can all get back to business.
• Kevin Bastuga is co-founder of Signature Bank, based in Rosemont