(This post originally appeared on The Guardian)
As the Covid-19 pandemic pushes many of America’s small businesses to the edge of collapse, now is the moment for bankers around the country to really show that they give a you-know-what about small businesses.
Congress has passed a giant $2.2tn bill to help people survive the coronavirus pandemic. As part of this bill, $377bn has been set aside specifically to aid small businesses. In effect, the government is giving free money to small business owners that qualify for this aid. And most do.
If you’re running a company with fewer than 500 employees, you can now apply for up to a $10m loan under the Small Business Administration’s Section 7(a) program.
But these are not just loans. It’s free money. That’s because for those businesses that apply before 30 June, any individual loan amounts that are being used to cover eight weeks of payroll (including sick time), rent, utilities and mortgages will be forgiven. Which means that the government is literally funding our operations for a two-month period.
Are there limitations? A few. Employee compensation over an annualized $100,000 wouldn’t be part of the calculation. Documentation must be provided. Layoffs during this period would be penalized. But then there are some other bonuses. For example, non-profits and freelancers qualify. Loan payments can be deferred for up to a year. All fees are waived. Forgivable amounts are not taxed.
There’s one big obstacle that could get in the way: the banks.
These loans are being issued through the SBA’s network of member banks. And the bankers I’ve spoken to already have not exactly impressed me. When asked to comment, a few told me they “didn’t have time” to answer my questions about this program. A few others were hesitant until the “final legislation was passed” (even though the small business portion of the bill is not even under debate). Others said they hadn’t “made their plans” on how they were going to tell their small business customers.
Not a good sign out of the gate.
Like all businesses, bankers are also facing challenges. They’ve got to get their existing work done even though their employees are now working for home. They’re trying to keep their important customers happy and continue operations despite the disruptions caused by the pandemic.
For some of them, this stimulus bill is a potential hassle. The loans are low interest. Even though the government is guaranteeing them, approvals and paperwork flow will still be required. They will have to deal with many requests and repeatedly answer many of the same questions. They will need to train their loan officers. For many – particularly those that make their profits from big corporations and not necessarily small businesses – it’s just a pain in the neck and may not be worth all the headaches.
Well, my banking friends: now’s the time to step up. We need you.
This may not be the most profitable work and it will definitely be more work. But I’m imploring you to jump in and not make empty gestures. There are countless small businesses who need this money. There are many more that aren’t even aware of this stuff. These are people who you can help. These are livelihoods that you can sustain and communities you can save. This is your opportunity to really make a difference. It’s also an opportunity to connect with new customers too.
Banks should be jumping on this right now and not waiting or delaying. This is not the time to be conservative or prudent. This is the time to step up. How?
They should be communicating, educating and informing their local small business communities of the stimulus cash that’s available to help them survive. They should be writing blogs, producing videos, appearing on TV, radio and podcasts to get the word out. They should be setting aside special hours, making calls, working harder. They should be reaching out directly to their customers about the benefits they can offer. They should be making this their role to play in helping the country through this epidemic.
Why? Because banks care about small businesses, right? Well, if they really do, this is the time to prove it.