Alabama banks preparing to assist small businesses with recovery — ‘Call your banker’
It was only two months ago that the small business sector recorded its highest level of confidence in the last 50 years. Now, most of those same businesses across Alabama await the opportunity to rebuild once the COVID-19 crisis stabilizes.
At the center of that recovery will be Alabama’s banking industry.
A key provision of the historic economic stimulus package passed by Congress, and signed into law by President Donald Trump, is the Small Business Administration’s (SBA) Paycheck Protection Program.
Under this program, small businesses with fewer than 500 employees will be allowed to apply for a low-interest Paycheck Protection loan of up to 2.5 times their average monthly payroll costs to cover expenses related to payroll, health insurance, retirement contributions, covered leave, rent, utilities, and interest on debt payments.
Alabama’s banks will play a pivotal role in getting this much-needed capital into the hands of small businesses all across the state.
In a statement to Yellowhammer News, David Nast, president and CEO of Progress Bank and Trust, stated that his industry is ready to handle the needs of its customers as they take advantage of the federal stimulus package.
“Banks in our state are already very familiar with helping customers access SBA funding,” said Nast, who currently serves as chairman of the Alabama Bankers Association. “Nearly 94% of banks headquartered in Alabama are SBA-approved lenders, and that number could easily grow higher over the next few weeks.”
Reassuring its customers throughout the crisis has been a priority for the Alabama Bankers Association (ABA).
Through its “Safe and Sound” campaign, the ABA has been spreading the message that even in these uncertain times, a bank account is the safest place for funds to be stored.
But the association has also made clear that banks and customers will need to work together to recover from the economic impact of the coronavirus.
“No Alabama bank has closed its doors during this crisis,” Nast said. “Even banks that have changed their lobby hours are still meeting customer needs through drive-thru or online options or by appointment. Regardless of how banks are interacting with their customers, our advice for individuals and small businesses has been to put ‘Call Your Banker’ near the top of the to-do list. While every bank and every customer is unique, bankers can provide access to multiple helpful options, whether it’s applying for an SBA loan or modifying an existing agreement.”
Treasury Secretary Steve Mnuchin outlined today that loans may be available for small businesses as soon as Friday with filing instructions potentially coming by Monday afternoon.
Wiregrass banker Hope Johnson emphasized that bankers will continue to be one of the best resources for information for customers.
“Congress is clearly positioning SBA to be a key player in the country’s economic recovery,” said Johnson, president and CEO of Slocomb-based Friend Bank and the current treasurer of the Alabama Bankers Association’s Board of Directors. “As an SBA Express lender myself, my advice would be for anyone considering an SBA loan, including the Paycheck Protection loan, to contact your local banker. Importantly, the Paycheck Protection loan may be forgiven if borrowers meet certain payroll requirements.”
When it comes to SBA loans in particular, there are some things small business owners can do to prepare for the next steps.
While regulations related to the Paycheck Protection Program have not been finalized, business-owners should be ready to produce information regarding payroll, debt and overhead expenses when they meet with their banker and apply for one of these loans. The U.S. Chamber of Commerce has prepared a helpful checklist that will answer questions about eligibility, proper documentation, borrowing limits and loan forgiveness.
“Even though this new SBA program is gaining a lot of publicity, it’s likely not the only solution available for customers who have been damaged by the COVID-19 pandemic,” says Johnson. “Alabama banks stand ready to work with our customers during this challenging season, and look forward to helping our small businesses restart Alabama’s economic engine.”
Watch a short video from ABA aiming to help inform its customers during the COVID-19 crisis:
Tim Howe is an owner of Yellowhammer Multimedia