The fate of small businesses across the country are on many people’s minds this holiday season. Many holiday traditions and celebrations are being set aside due to the pandemic still at large. While families and individuals can survive a year with scaled back celebrations, can restaurants, boutiques, salons and other small businesses say the same? Have these small businesses received enough support to keep their doors open?
When the Paycheck Protection Program (PPP) was announced, community banks rose to the challenge to support small businesses and provide them with the resources they need to stay in business for the time being. This work is far from over as forgiveness looms and more funds are expected, but 2021 presents an important opportunity for banks to further support these businesses. The institutions that tighten their operations and provide exceptional customer service for local businesses in the year to come will be the ones that are relied on for a lifetime. Here are a few key opportunities to keep front of mind:
PPP loan forgiveness provides insight to institutions for strategic lending opportunities. Banks must keep a close eye on PPP forgiveness; these insights can be used as indicators to the future health of a business. If a company cannot meet the safe harbor requirements or has unforgiven balances, it may mean they were struggling already, or have a business structure that is not conducive to the “new normal.” And that loan will have to be repaid. It’s essential that banks leverage technology to streamline and centralize PPP relationships and other business accounts as this will provide them with more visibility into their ins and outs. Monitoring forgiveness provides an added layer of timely customer data and transparency, therefore allowing bankers to find ways to best accommodate their customers’ unique circumstances.
There will likely be an increased interest in SBA lending. This is the perfect storm. On one hand, bankers have had more experience with SBA lending through PPP, opening them up for added SBA offerings. On the other hand, entrepreneurs will rise from the ashes of the post-pandemic atmosphere and start new businesses to serve new needs. While these entrepreneurs may be turned down by some institutions, this is a chance for community banks to help provide this segment with the funding they need to help grow the future economy.
The increase in deposits creates an opportunity for more loans. Community banks have deposit-heavy balance sheets and the recovering economy positions them for significant loan growth. Bankers will be able to boost small business relationships if they keep their dedication to providing exceptional service top of mind and leverage technology to help them grow with ease. In 2021 bankers can continue the good will they have developed with small businesses by providing personalized, fast services that help them fully get back on their feet.
To succeed in today’s landscape, bankers need to provide customers with strategic guidance and support. Of course, it’s easier said than done. Bankers are busy. Improving operations and streamlining lending processes with a digital lending management system gives bankers back the time to focus on customer needs.
Community banks are well positioned and have a driving accountability to help Main Street regain its financial good standing. While this is daunting, it’s feasible; the banks that focus on their high level of service and go above and beyond will be the ones that demonstrate their excellence and help rebuild communities. These are the trials that build legacies.