The Paycheck Protection Program was miraculous. Let’s not stop now.

The Paycheck Protection Program was miraculous. Let’s not stop now.

By Terry Turner, president and CEO

April 16, 2020

I might be one of the only bankers in the country right now saying “Thank You” to the SBA.

Since Congress authorized the Paycheck Protection program on March 27, and the SBA rolled out the application on April 3, nearly every bank in the nation has experienced frustration, stress and a flood of client requests and questions. We were asked to establish new loan review systems with 48 hours’ notice. We had to implement new processes and technology solutions while being deluged with applications.

And we had to do it all in what was essentially a race against all the other banks to get our clients a piece of a limited pool of money.

So yes, the PPP has been a frustrating experience.

But I believe strongly in perspective. It’s the larger perspective on this situation that’s led me to say “Thanks” to the agency that some say caused all this frustration.

In just two weeks’ time, the federal government conceived of, planned for, approved, implemented and completed a program that distributed $349 billion in emergency funding to small businesses.

That’s miraculous in any time, much less one with more political disagreement than we’ve seen in many generations.

Here’s some more perspective, courtesy of John Maxfield at Bank Director magazine:

Last year, the SBA approved 58,000 loans in its two main loan programs, for a combined $28 billion in small business credit. That’s 232 loan approvals per day, accounting for weekends and holidays.

From April 3-13 of this year, by contrast, the SBA approved 1,035,086 loans under its Paycheck Protection Program. That’s 103,508 loans per day, assuming SBA employees worked through the weekend.

That’s a 44,516% increase.

To take this one step further, the SBA had 3,943 employees at the end of 2019. Let’s say half of those, or 2,000, are directly involved in the approval process, as opposed to providing logistic and administrative support.

That’s 52 loans per employee per day.

He’s right. The SBA did what seemed impossible.

Their plan was strong: Stop the bleeding with the Paycheck Protection Program to help keep people paid and businesses solvent. Asking banks to serve as the distribution hubs was smart. We’re established sources of capital in every community and have the infrastructure in place to review and approve loan applications and to distribute the government’s money.

Yes, the rollout was imperfect. The rules changed almost daily, and intake systems were slow. At a certain point, however, it becomes a bit like complaining about a glitch in your iPhone. Sure, it’s frustrating. But the fact the device exists at all is a miracle of ingenuity.

At the risk of sounding overly boastful in a time of crisis, we at Pinnacle—and many American banks—did our part. Despite not getting to every client in time, we still have a lot to be proud of. That’s tough for some clients to hear, which is why I want give it some more perspective.

We took nearly 12,000 applications in 12 days, worth a total of $2.3 billion in loan requests. We processed, got approval for and are working to fund $1.8 billion of that. 

To put that in context, our entire bank holds $19 billion in loans. It took us 20 years to get there. We were tasked with growing it by 12 percent in just 12 days, and we succeeded in growing it almost 10 percent. We didn’t hit the target, but we got closer than anyone would have thought.

To get there, our associates did everything they could and left everything on the field.

We put all hands on deck and worked around the clock on intake, data entry, processing and review. Every financial advisor (lender) has worked on nothing but PPP since April 3. We assigned every credit advisor and office leader. Financial specialists, treasury management advisors, back office support, learning and development and communications staff—anyone qualified to do the work was working on PPP. We reassigned entire teams to data entry and processing. All of them working long hours—mostly from home, while managing kids and the stress of the pandemic.

We even implemented brand new technology to move applications more quickly to the SBA for approval and funding. That normally takes at least six months to a year to pull off. We did it in a week.

Our goal from the beginning was to get our clients as high in the queue as possible, knowing that every bank in the country would be fighting for a scarce resource. While we didn’t get every client done, we got more than our fair share.  Based on our asset size, you might have expected us to get about $490 million of the $349 billion allocated nationwide. In fact, we got roughly $1.8 billion, just under 4 times what would have been “our fair share.”

To those whose loans were not funded, this is no comfort because nothing has changed. They are just as worried about making payroll or covering their rent as they were two weeks ago.

That’s why we’re still doing our part. We have their applications, and we’re still reviewing them as if the money has not run out.

At the same time, we are talking with SBA leadership in Washington, D.C., and urging our elected federal officials to authorize the next wave of PPP funding.

Our message to them is simple: America’s small businesses are counting on you. Small and mid-size companies employ millions and contribute trillions to their communities. The PPP program is a lifeline that will help many of them survive this crisis.

The demand for the first wave of funds was overwhelming. It seems that nearly every business in the country applied for this loan, and it strained the system beyond what it was built to handle in that short amount of time. That should tell all of us how great the need is, and how much of a need still exists.

So now it’s time for the next wave of funds. That requires Congress to act now to approve additional funds for these companies if they are to survive this crisis.

We don’t dispute the facts of science. It is difficult to set a timetable of economic recovery against a force we cannot control. But we as Americans can do everything in our power to help small and mid-size businesses survive in the interim. Without them, there won’t be much of an economy to recover. We need to do the right thing and re-fund the PPP.

Regardless of what lawmakers decide, we will do everything we can to help our clients get through this and be set up to thrive on the other side of it. Even for those whose loans were funded, their recovery is just beginning.

We are committed to seeing this through. As we like to say on Team Pinnacle, Onward!