As the Paycheck Participation Program (PPP) moved into its first full week, the White House welcomed a group of bankers to meet and discuss the success and concerns about the program.
Treasury Secretary Steven Mnuchin said more than 3,000 banks had participated in the program since it launched, a combination of community banks, regional banks and large banks.
“I just want to thank the SBA (Small Business Administration) and the Treasury. This is a brand-new program. It got up and running in less than a week. And last Friday, we saw the incredible response,” Mnuchin said, according to a transcript of the event released by the White House. “Every single one of these people that’s employed by a small business is one less person that’s out of work and on unemployment insurance, and it’s one more person that’s part of a business so that when we’re ready to reopen, 50 percent of America’s workforce is in small business.”
SBA Administrator Jovita Carranza said the agency was committed to supporting all the nation’s small businesses.
“But we’re also committed to sustaining their resiliency, as well as increasing the number of employees they keep on payroll. And so that’s been our mission,” she said. “And we have not been shy of accelerating and incorporating and also partnering with not only the lenders that are on this teleconference, but many of them. We have over 3,000 — 3,200 banks — as the secretary has mentioned previously, and we have about 300 new lenders. So I’m very proud of the lending community and their partnership.”
The CEOs of some of the nation’s largest banks were in attendance: Bank of America, Citigroup, Goldman Sachs, JPMorgan Chase and Wells Fargo. But a trio of community bank CEOs also were in attendance – and one who was invited was so busy, he couldn’t make the meeting.
Southern Bancorp CEO Darrin Williams was the first to speak about his bank, a $1.5 billion Community Development Financial Institution (CDFI) bank serving the Arkansas-Mississippi Delta region.
“As a CDFI, 60 percent of our lending activity must take place in low- and moderate-income communities. These communities are hurting,” Williams said. “People are laid off and they often lack sufficient savings. Now, typically, in an economic downturn, cuts in lower-wealth communities are deeper and last longer than the wealthier communities. My bank and other CDFIs across America have been working day and night since the program opened on Friday, processing applications for both customers and non-customers.”
Williams said his bank had submitted more than $16 million in PPP applications already, began cutting checks to businesses the first day, and had hundreds more applications in the queue.
“And as you continue to push for additional support, let me thank you for your announcement today for pushing for an additional support of $25 billion for the PPP. Please … consider a carve-out for CDFIs — that would include MDIs and other small community banks — because we have a proven track record of promoting economic stabilization, job preservation, and job creation in some of the hardest-hit rural, urban, and Native American communities.
“And finally, one question to Administrator Carranza, on behalf of the small colleges who are looking for guidance — and I will — must acknowledge Congressman French Hill, who is my congressman, who’s been very helpful on this issue. We’re looking for — to determine whether work-study students count against the 500 limit of the PPP program. Of course, that’s a financial aid program and most students are not intended to be employees, but unless we get some guidance on that issue, we’re not exactly sure what to do.”
Independent Community Bankers of America Chairman Noah Wilcox, the CEO of Grand Rapids State Bank in Minnesota, also was in attendance to represent the association’s members.
“Despite some difficulties during the first couple of days — getting into the system for some banks that had an impact on small businesses that anchor our economy — we’ve worked through the nights and we’ve worked through the weekend to secure as much funding for those in need and those that qualify, and especially for those that are willing to continue to keep their workforce on the payroll, working to support what is an otherwise strong underlying economy,” Wilcox said. “We know from an informal survey that about one third of all community banks still do not have access to the system. And that means those community banks have been boxed out and unable to serve their communities and their customers. And just imagine the awesome power and the difference the community banking industry could make if we had all 100 percent of those banks with access to the system.”
Community Spirit Bank CEO Brad Bolton, whose rural $150 million institution serves four counties in Alabama and Mississippi, said he was proud to wear the title of a community banker.
“And although my bank was locked out of the program until Sunday night, we worked through the weekend (inaudible) applications — again, submitting loans. And as soon as we gained access, we started submitting those loans,” he said. “As a matter of fact, I was up three nights, up to 2 a.m. submitting loans to get the money flowing. And as of today, we’ve gained approval for loans as small as $7,000, and our average loan size is around $82,000. So this is real money. It’s about to begin flowing back to small businesses and their employees.”
Bolton said he wanted to ask the president, whom he called a problem solver, and the administration for help in expanding access to PPP.
“No challenge is too big for your leadership. But I also want you to know that many of my community bank brethren do remain on the outside looking in, unable to gain access to the SBA E-Tran system,” he said. “I ask you to deploy the resources to get every community bank in this country in this system, because, Mr. President, community banks who represent the only banking presence and one-third of all U.S. counties make over half of small-business loans. And I’m confident, if we can unleash the full power of those community banks, including the one third listed in a recent survey by ICBA who are unable to gain access to the systems, small businesses will be restored, paychecks will be restored, and our communities can begin to restore and begin flourishing again.”
Bank of America CEO Brian Moynihan told the gathering that the bank had taken about 250,000 PPP applications at the time, with 3,000 employees working with small business clients, and that the bank was continuing to get several thousand applications every hour.
Chase’s Gordon Smith, who is acting as head of the bank while CEO Jamie Dimon recovers from surgery, said the bank already had 375,000 application requests that would total about $40 billion.
At the end of the event, Mnuchin was asked about the concerns brought up by community bankers about the difficult accessing the system.
“There’s just a lot of — 30,000 new users coming onto the system. So they’re all getting authenticated. We’ll get everybody approved,” Mnuchin said.