Community banks helped nonclients receive forgivable loans through their participation in the Small Business Administration’s Paycheck Protection Program (PPP), and many are implementing strategies to convert the new clients to long-term small business customers.
The PPP, which was recently extended to Aug. 8, has been hailed by the Trump administration as a successful method of distributing much-needed financial aid to small businesses struggling to stay afloat amid the coronavirus pandemic. But the hastily crafted program was not without its bugs.
The SBA’s E-Tran network experienced several glitches, borrowers have been confused by the PPP loan’s terms, and some criticized the program’s structure, which allowed banks to prioritize some customers over others.
It wasn’t a perfect program, but community banks participating in the PPP have pulled their weight among some of their larger competitors while showcasing flexibility, technology and personal touch during the crisis.
Banks with less than $10 billion in assets made 2.5 million PPP loans as of June 30, or 44% of loans funded through the program, according to data from the SBA.
Banks with $10 billion to $50 billion in assets made 739,912 loans (19%), while banks with more than $50 billion in assets processed 1.6 million loans (36%).
Community bankers say they hope their newfound customers, some of which came from larger competitors, will stick around, even after the PPP is a distant memory.
“I hope that people don’t have short-term memories and they do remember being in that position of panic,” said Lauren Ranalli, president and chief financial officer of First Resource Bank, which made 350 PPP loans accounting for $58 million.
“We’ve had business owners in tears, terrified about their business and we were the ones that got them the help that they needed,” Ranalli told Banking Dive.
Many community banks like First Resource who gained new customers through the PPP are taking a proactive approach to ensure their services are remembered post-pandemic.
“We’ve done a whole follow-up campaign with online reviews, and our retail team is following up with every single one,” Ranalli said. “Every single one is a sales opportunity that we intend on converting. … I’m really optimistic that those customers are going to stick around.”
Noah Wilcox, who serves as president, CEO and chairman of Grand Rapids State Bank and Minnesota Lakes Bank, said both institutions witnessed an influx of noncustomers during the first tranche of the PPP.
Wilcox, who also serves as chairman of the banking trade group Independent Community Bankers of America (ICBA), said close to 80% of the 472 PPP applications his two banks received were from new customers. The two banks made $44 million worth of PPP loans.
“We began asking ourselves, ‘How do we capitalize on…