Processing Your Payment

Please do not leave this page until complete. This can take a few moments.

April 7, 2020

CT banks reel, then react to SBA loan-application torrent

Clockwise from upper left: GNHCC’s Sheehan, KeyBank’s Barger, Whittlesey’s Kerrigan and Wester’s Klaus on Tuesday morning’s Zoom webinar.
By Michael C. Bingham

As small businesses grasp desperately for straws to survive the coronavirus shutdown, Connecticut banks find themselves on the front lines of the financial bloodbath.

On Friday (April 3) the U.S. Small Business Administration (SBA) began accepting applications nationwide for its new Paycheck Protection Program (PPP), a $349 billion initiative that offers small (fewer than 500 employees) companies low-interest loans up to 2.5 times monthly payroll that are forgiven if the businesses maintain their workforce over 90 days.

Financial institutions nationwide were flooded with applications on Friday — Bank of America alone received 10,000 loan applications in the first hour. Like their peers across the country, most Connecticut banks were unprepared for the volume of inquiries. Others risked applicants’ ire by refusing applications from non-customers. Still others declined to take part in the program altogether.

On Tuesday morning the Greater New Haven Chamber of Commerce hosted a webinar on “Accessing Stimulus Loans & Programs” moderated by chamber president and CEO Garrett Sheehan. The hour-long session detailed the first three days of the PPP rollout from the perspective of the financial institutions — and prospects for the near-term financing for beleaguered small companies in Connecticut.

Panelists included Jeff Klaus, Connecticut market president for Webster Bank; James Barger Connecticut and Massachusetts president of KeyBank; and Brian Kerrigan, a lawyer and advisory partner with the Hartford-headquartered CPA firm Whittlesey.

The first two weeks of the COVID-19 shutdown created economic displacement unseen since the darkest days of the Great Depression, perhaps ever. During the first two weeks of the shutdown at the end of March, 10 million Americans applied for unemployment benefits as companies large and small laid off workers who were commanded to “shelter in place” and commerce screeched to a halt across the nation and around the globe.

“During the 2008-09 [U.S. financial] crisis, banks were one of the problems,” said KeyBank’s Barger. “In this crisis we view ourselves as one of the solutions.”

The volume of inquiries the bank fielded Friday was “massive,” Barger said. “The volume of loans has never been seen.”

As of Tuesday morning KeyBank had received 25,000 applications for small-business loans, he said, and approved some $7 billion in PPP loans across the bank’s 39-state footprint. (With some $138 billion in assets, Key is the 28th largest U.S. banking company.)

Like many financial institutions, KeyBank was unprepared for the volume, and Barger said the weekend was spent retraining and redeploying bank staff to cope.

“We’re doing everything we can to process applications as quickly and efficiently as we can,” Barger said.

Waterbury-headquartered Webster ($30.4 billion in assets) processed 5,000 loan applications and approved $3 billion in loans since the Friday morning PPP application rollout, according to Klaus (who also chairs the GNHCC’s board of directors). The volume was so great that the bank redeployed 100 employees over the weekend to handle the SBA loan-application blizzard, he said.

Both Klaus and Barger acknowledged that preference was given to their banks’ existing customers — commercial borrowers first, depositors second. That may not be popular with small companies desperate for an immediate lifeline, but reflects the reality of what their own institutions can accommodate.

“Webster absolutely was prioritizing clients first,” Klaus said, “but we are now talking to [loan applicants] having difficulty with their own banks and accepting inquiries” from them. He acknowledges that “It will be a slower process than normal,” to process the applications of non-customers.

“We’re focused on clients first,” said Barger, who acknowledged that Key had also received countless queries from business owners whose own banks are not participating in the PPP initiative. “It’s come down to an operational issue now — how fast can we process these applications?” he added. 

Whittlesey’s Kerrigan urged business owners to not to wait to apply for the SBA loans — $350 billion doesn’t go as far as it once did. Apply now, he counseled, apply for the maximum amount available. “We don’t see any downside,” he said. Plus, “We don’t know how long this money is going to last.”

Above all, “Be patient, please be flexible,” said Webster’s Klaus. “This program is morphing even as we speak.”

He added, “We all have to sort of roll with events right now.” 

Sign up for Enews

Most Recent

Most Recent

0 Comments

Order a PDF