Bank / Financial
After the lifelines of the Paycheck Protection Program, financial institutions are helping small businesses with traditional SBA loans.
By Ron Marsico, Contributing Writer on August 17, 2021
For the second year in a row, Community Banks of New Jersey is helping small businesses across the Garden State, enabling them to survive the pandemic and pay employees with help from the federal government.
Columbia, TD, Peapack-Gladstone, Lakeland, and Valley are among the state banks that have partnered with the U.S. Small Business Administration (SBA) to provide Paycheck Protection Program (PPP) loans . PPPs have helped small businesses struggling with the COVID-19 crisis to maintain their paychecks, with loans eventually being forgiven if key job retention goals have been met.
“We are proud of how we serve our local communities,” said Oliver Lewis, executive vice president and head of commercial banking at Columbia Bank. “When I say our people were working up to 18 hours a day, it’s because they felt a kind of burning desire to continue serving the community they work for.”
In 2021, Columbia underwrote more than 1,600 PPP loans worth nearly $300 million, peaking at some 2,400 to 2,500 PPP loans in 2020 worth about $487 million. The bank has already helped borrowers get forgiven for nearly $290 million of the 2020 total.
“I think Columbia Bank shone and I think a lot of our fellow community banks did too,” adds Lewis.
At the peak of 2020, about 150 employees were working only on PPP loans, even though Columbia’s SBA program has only three affected employees.
“It was pretty much a bank-wide team effort,” says Rahbar Ameri, senior vice president and director of small business lending at Columbia.
Prior to the pandemic, the SBA’s partnership with banks largely focused on a suite of core programs known as 7(a) and 504. The 7(a) is a virtual kitchen sink, providing small business capital for start-up, maintenance of operations and retention. cash to reinvest and develop. The 504 program focuses on real estate and capital equipment purchases.
For example, the SBA typically guarantees banks a 75% return on investment if a 7(a) loan fails, but has temporarily increased it to 90% during the pandemic. Set-up fees – which can cost thousands of dollars – have been waived until September. Borrowers were also forgiven months of principal and interest on these loans.
“The SBA program helps banks lend to more customers than they would on a conventional basis,” said Tom Pretty, head of SBA loans at TD Bank. “On the client side, it helps borrowers grow their business faster, preserve cash flow so they can continue to invest in their business…and ultimately grow the economies of New Jersey and the states.” -United.”
But PPP loans and their forgiveness dominate the SBA landscape during the pandemic, amid catastrophic falls in a myriad of industries and frightening uncertainty. In 2021, PPPs are particularly useful for businesses still reeling, such as restaurants, gyms and the performing arts.
TD Bank plays an important role in PPP, not only in New Jersey where it ranks as the top SBA lender, but also nationally.
In 2020 and 2021, TD issued over 133,000 PPP loans in 14 US states, worth a staggering $12.2 billion. New Jersey accounted for more than 36,000 of those loans, totaling more than $3.2 billion.
For the fiscal year ending September 30, 2020, TD Bank of New Jersey made 308 7(a) loans worth approximately $50.3 million and 20,504 loans worth approximately $80 .2 million.
Activity in these programs continues to rebound in 2021, especially with the additional incentives running through September.
“We’re very, very busy on the 7(a) and 504 side,” Pretty says. “I love the SBA space because we really help this critical part of our economy – the small business borrower and entrepreneur.”
For Peapack-Gladstone Bank, PPP efforts have produced many concrete and candid examples of businesses and jobs being saved.
“We’ve heard a lot of great stories and emails, where borrowers have come out and said, ‘If not for the PPP loan – Round 1, Round 2 – we would have closed our doors,'” says Andrew Glatz, Peapack- Gladstone’s senior managing director, responsible for SBA in the commercial banking division.
“At Peapack, in the first round, we saved 30,000 jobs. It was great,” says Glatz. “We had everyone on deck. It was definitely a feel-good moment. … Many industries have certainly benefited.
In terms of conventional SBA loans – mostly 7(a) – Peapack-Gladstone, mostly in New Jersey, made 40 loans worth about $35 million in 2019. Amid the pandemic, those numbers are down to 28 loans worth around $26 million in 2020.
While Peapack-Gladstone focuses primarily on SBA loans, it participates in a limited way in the New Jersey Economic Development Authority’s program, which aims to ensure state businesses have funding to grow and grow.
“It’s a great program that the (EDA) has, and they do some overlap with the SBA,” notes Glatz. “They (EDA) are focused on job retention and job growth programs.”
At Lakeland Bank, John Rath, Chief Lending Officer, and Pamela Frie, Senior Vice President, Head of SBA Lending Team, Refocus on Traditional 7(a) Lending After PPP Domination in 2020 and H1 2021.
“We’re on track to fund probably close to $20 million this year,” Frie says of the 7(a) loans.
In 2020 and 2021, Rath reports that Lakeland issued some 3,300 PPP loans totaling around $476 million.
“We feel really good,” Rath said. “We deliberately reached out to small businesses and low-to-moderate income communities to ensure they were also supported.”
At Valley, Chris Kneer, senior vice president, SBA lending, said his team is also returning to 7(a) and 504 programs after being sucked into PPP lending.
“Valley is really using the programs to build on what we already have, which is the relationships,” Kneer says of the 7(a) and 504 programs for small businesses. “They are real customers. This is really obvious for a bank like Valley.
In New Jersey, Valley’s current pipeline for 7(a) and 504 loans is nearly $10 million.
For Kneer, now is the time for small businesses to act.
“This is probably the best time I’ve ever seen to do an SBA 7(a) loan,” Kneer said. “It’s just ideal for those who qualify. Everyone is optimistic about the economy. We see a lot of business acquisitions.”
Meanwhile, despite the problems and frenzy associated with the PPP, Kneer was among those who saw it as essential.
“I don’t know how the economy would have survived without PPP,” says Kneer. “There were definitely some difficult things for customers, banks and everyone else to resolve. That said, its scale and the speed with which it was put together was incredible.
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