Small banks struggle to get SBA to return calls, process emergency loans

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Community bankers are struggling to reach federal agencies to complete applications as they attempt to address heavy demand from small businesses for emergency loans.

The Paycheck Protection Program went live Friday, opening up $349 billion in assistance for companies harmed by the coronavirus outbreak. The Small Business Administration tweeted at the end of the day that 12,461 loans worth $3.9 billion had been made, while the Treasury Department noted that “almost all" of the volume came from community banks.

The messages did not address any of the headaches community banks say they have experienced in making those loans happen.

Bank of Zachary in Louisiana struggled to reach its SBA field office, according to Vice Chairman Preston Kennedy, who then turned to social medial to issue a plea for help. The bank has not heard anything from the SBA since Tuesday, Kennedy said.

“Crickets since then,” he tweeted.

“We have reviewed all documentation sent, have met overnight regarding out process … even had a crew go into the bank and develop new [promissory] notes and test digital signatures,” Kennedy, a former chairman of the Independent Community Bankers of America, wrote in a tweet directed at the SBA and Treasury Secretary Steven Mnuchin.

The bank has “a backlog of requests,” he added, noting that his chief financial officer had been liquidating securities to fund loans.

“We just need access to submit” applications, Kennedy tweeted. “Community banks are willing and able, but we need access and we need answers. We don’t need to hear any more platitudes.”

Other bankers said they had to wait for assistance from the SBA and Treasury.

The first application at Endeavor Bank in San Diego was “stuck in limbo” for more than three hours as management tried to get through on an SBA hotline, CEO Dan Yates tweeted. By the end of the day, Endeavor was able to get four applications through.

"It will be a long weekend!" Yates tweeted late Friday.

Independent Bank in Grand Rapids, Mich., is handling “very large” demand for loans, said CEO Brad Kessel.

“We have plenty of liquidity to meet the demand at this point,” Kessel said. “The big issue here is not so much at the bank level — it’s the Treasury and the SBA helping to facilitate the process. I’m hopeful for all of us."

Jill Castilla, CEO of Citizens Bank of Edmond in Oklahoma, has also struggled to reach any government officials, tweeting late Friday that her team has “been stuck for a week” trying to reach someone.

“Have not heard of a single other community bank that has access,” she added.

Other community banks are taking a wait-and-see approach.

Chris Nichols, chief strategy officer at the $17 billion-asset CenterState Bank in Winter Haven, Fla., said the company has thousands of interested clients but held off on processing loans on Friday because federal guidelines remain too vague.

“We’re still waiting for more details,” Nichols said, expressing hope those will come over the weekend. “There’s still quite a bit of disarray.”

Nichols said he expects enough banks will participate and meet demand.

Community banks could see even more demand next week as some banks restrict participation to existing borrowers and others lack the capability or credentials to process requests.

Jon Prior and Jim Dobbs contributed to this report.

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Community banking SBA Treasury Department Small business Paycheck Protection Program