With passage of the Consolidated Appropriations Act, 2021 in hand, businesses and financial institutions alike are expressing hope that the Covid-caused wolf at the door will be turned away yet again.
Sara Tucker, chief lending officer and director of business banking at First County Bank, said that while customers and lenders alike had been frustrated by the months it took for Congress to pass the latest stimulus bill, the process should be much easier this time.
“We fielded a lot of phone calls asking if the banks had any intel on the timing and what it would look like,” said Tucker, also an executive vice president at the Stamford-based firm. “We knew that any help coming (from the federal government) would be impactful, but whether it would be enough or not (to sustain businesses) was really hard to say.”
Signed into law on Dec. 27, the new measure contains $325 billion for small businesses, including $284 billion in forgivable Paycheck Protection Program (PPP) loans; $20 billion for businesses in low-income communities; and $15 billion for economically endangered live venues, movie theaters and museums.
“There has been a lot of guidance provided to the banks this time,” Tucker said, as opposed to the first PPP round in the spring, whose quick rollout by the Small Business Administration caught many lending institutions unprepared and uncertain as to how to proceed. “We were often working on the procedures and processes on the fly” back then, she said.
As a result, smaller lenders tended to fare better than the big banks, she said. “We ended up gaining a lot of customers from the larger banks,” she added. “We were able to work with our customers as well as noncustomers, who said their bank couldn”™t help them or was not being receptive to them.
“And those customers are sticking with us,” she continued, “and have brought all their deposits to us.”
Tucker”™s comments echoed those made by much smaller lenders as Bridgeport-based Nutmeg State Financial Credit Union ”” “Credit unions like to say we”™re the first responders to a financial need,” its President and CEO John Holt told the Business Journal in April ”” and Newtown Savings Bank, which processed 766 PPP loans for $97 million. That bank”™s president and CEO, Ken Weinstein, also said it had picked up customers.
First County benefited in part by having an electronic processing system in place, Tucker said ”” even though its staff initially was dealing with PPP loans by hand due to the crush of applications. “We always want to be as responsive as possible, to be ready as soon as we can,” she said.
Those efforts could be helped by an announcement made last month by Numerated. The Boston firm, which bills itself as “the leading business lending technology company for banks and credit unions,” said it is fully automating lending for the new round of PPP funding. The result, it said, will save lenders and borrowers thousands of hours of time and frustration.
More than 25,000 bank and credit union employees have used Numerated to process more than $34 billion in PPP relief funds, protecting more than 250,000 small businesses and 2.3 million paychecks, according to the company. At the height of the program, Numerated”™s platform was approving three PPP loans every second at a rate of $250 million per hour through its integrated system.
Meanwhile, First County processed 1,144 loans for about $125 million, Tucker said. “For a bank of our size, that”™s a lot ”” typically in a single year we”™ll do maybe $140 million in much more customized, larger loans. About 50% (of its PPP loans) were for less than $50,000.”
In the meantime, whether qualifying persons will ultimately receive $600 or $2,000 stimulus checks from the federal government is still up in the air. For now, $600 checks are in process; Tucker estimated that some could arrive this week.
Senate Majority Leader Mitch McConnell (R-Kentucky) has dismissed efforts to increase direct payments to $2,000 as “socialism for rich people.” Both his home and that of Speaker of the House Nancy Pelosi (D-California) were vandalized over the past weekend, apparently in frustration over the leaders”™ failure to reach an accord. “Were”™s (sic) my money” was scrawled on McConnell”™s front door in Louisville ”” a move McConnell characterized as a “radical tantrum” in a statement.
When it comes to non-PPP loans in today”™s climate, Tucker cautioned, “This is not necessarily the best time to go to a bank. A lot of industries have been doing quite well after the first three months (of the pandemic) ”” anything related to home sales, construction, landscaping, home appliances.”
E-commerce, car dealerships, attorneys and accountancy firms are also doing well, she said. “We”™re seeing a regular loan volume for those kinds of business segments.”
Otherwise, Tucker said, “a company has to have a business plan that makes sense and that takes into account the Covid-related impact on the economy. We”™re looking at the risk parameters very carefully.”
Should there be another round of federal stimulus legislation, Tucker expressed the hope that it would be targeted to particularly hard-hit industries such as restaurants and hotels.
“That”™s what to me makes the most sense,” she said. “But it”™s all ”˜TBD.”™ We have to see what happens with this round.”
