Memo to bankers: Don't attack SBA program, make it better
As a former bank CEO, small-business investor and bank customer, I want to urge the financial industry:
Please do not let the muddled process of the Small Business Administration’s new emergency funding program compromise the need to provide immediate financial support to thousands of small businesses that need cash assistance now.
With more than 10 million jobless claims filed in the last two weeks alone, bankers can no longer use the excuse that their system is stressed, responding with “we appreciate your patience during this time.”
No, bankers need to listen to their customer. The customers’ collective patience is exhausted. And for those that still have some, such endurance won’t pay the bills.
Businesses need cash, and they need it now, not after additional delays from an overstressed review and approval system.
The country is already more than two full weeks into this economic shutdown. The entry of an additional 15-day approval window, as planned by some lenders, would add two more weeks. Factor in these suggested “delays” and businesses may be 30-45 days away from obtaining the subsidy through the SBA’s new Paycheck Protection Program that was intended to be an immediate bridge solution.
If this happens, more and more businesses will be underwater every week. Millions more employees will be out of work. Bankers will be fiddling while the economy continues to burn.
The solution to stay afloat will be another nail in the small-business coffin. That’s unacceptable.
There are a number of ready solutions are available:
First, lenders can advance 50% of the applied for loan amount to all applicants immediately upon submission using current customers existing lines of credit, or by creating new facilities. If an LOC isn’t the right vehicle, deploy capital through other means — maybe even a handshake to trusted business owners — because people needed this cash yesterday and they simply can’t wait for an extended tomorrow.
Lenders can also utilize the approval period to review and refine the total amounts to be received. In fact, providing such instant access to half of the funding will buy some time to create additional flexibility for lender review.
Some lenders might say “it’s not that easy.” However, the risk from abuse and fraud is nominal compared to the economic damage additional delays will cause. Legal diligence and downside protection can’t be a priority right now.
This is a time for the banking industry to shine, not be part of the problem. Let’s not fall victim to papering the file at the expense of serving the customer. Perfecting the review and approval process will inhibit the needed access to funding.
And let’s not allow another system crash to be the excuse for an otherwise very well-intended relief effort. Decision makers need to act now. Leaders across the industry need to step up.
It’s time to lead from the front — and to be the solution to the incredible pain for so many.
The banking industry didn’t cause the crisis this time but can’t afford to become part of the problem. Bankers need to enable, accelerate and make solutions happen. This is the time to shine. If they do, customers will never forget it.
What’s the alternative? Millions of former small-business owners and employees will no longer be customers, just fresh names on next week’s unemployment roll.