The current state of emergency has been a crazy rollercoaster ride and the turbulence isn’t over yet, but the federal government has stepped up with assistance programs designed to ensure small business owners can keep employees on the payroll. The Paycheck Protection Program (PPP) is the latest and not only does it aim to keep small business doors open and offer some hope to quarantined millions, but it’s also an opportunity for small financial institutions to come through for customers and members in the moment of truth.
PPP—the Good News and the Bad News
At the end of March, Congress passed the CARES Act, a bill that, among other things, made funds available through the Small Business Association for businesses with fewer than 500 employees to temporarily cover payroll expenses. The money can be used for other business expenses, such as rent or mortgages and utilities, but the primary function of PPP funds are meant to keep Americans employed.
That’s the good news. The reality of how the program has played out since it’s release on April 3rd is what hasn’t turned out to be so great. First, the interest rate, initially set at .5 percent, was increased in the eleventh hour to 1 percent. While more than attractive to borrowers, the low interest remains a cause for concern with lenders, especially small community institutions.
What’s more, with over 30 million small businesses in the US, bankers braced themselves to field inquiries and take applications, only to have the program fall flat with a far from perfect launch. For one thing, community banks that weren’t designated as PPP lenders were supposed to have been able to participate in the process through the E-Tran system. However, technology glitches kept community institutions from being able to deliver. Plus, even banks that were able to access the program have found processing applications take more time and are filled with more challenges than anticipated. Additionally, the information initially provided by the government was incomplete. Subsequent instruction has continued to trickle out, but the guidelines and rules seem to change by the hour.
Coming Through for Customers
On the surface, the Paycheck Protection Program looked like an opportunity for banks and credit unions to be superheroes for small business customers. It may not have worked out as planned quite yet, but the PPP’s bumpy start can still be your chance to come through for your customers. It’s true that banks and credit unions won’t make much money on the program, but it’s an opportunity to preserve relationships and win future business.
Over the next months, the PPP will keep all financial institutions busy, but even those that are not SBA lenders can step in to help guide small business customers through the process. Every lender should be checking the U.S. Treasury and SBA sites, as well as the ICBA website frequently to become familiar with the most recent information and to stay on top of changes and developments. If your institution isn’t an SBA lender, you can still assist customers by providing guidance, advice, and the latest information on the program. You can also assist with filling out the paperwork, gathering the proper documentation, and referring them to a lender who can complete the application process for them. Keep in touch–daily, if possible and appropriate. Provide customers with updates on the PPP, the eligibility and application process (for pre-application clients), and application status (for those who have applied).
Most banks that do have access to the right channels for processing PPP loans have understandably put priority on their current customers, so anything you can do to streamline the process for your customer and, if necessary, the eventual lender will be appreciated on both ends. Don’t forget–throughout it all, you’ll want to gauge how happy your customers and members are with the PPP process, so you can continue to perfect your methods.
Closing the Social Distance
Right now, everything is about distancing, but Avannis gives you the means to bridge physical space and stay in touch and in tune with your customers. We provide you with an arsenal of customizable surveys designed to measure the customer experience, letting you know how they feel about every facet of your bank or credit union. Avannis can even create a survey specifically for the Paycheck Protection Program so you know how well your institution is serving your clients during this unprecedented difficult time. Our expertise will ensure accurate data interpretation so you can use it with our tools to help identify and eliminate pain points, resolve customer issues and concerns, and get the jump on offering opportunities to attract new customers even during this tentative time. And that’s just a few of the ways Avannis can help you be a hero to your banking customers. Contact us today to learn more.