Weekends. Nights. Eighteen-hour work days.
These, believe it or not, have become the new “bankers’ hours” amid the economic crisis that’s arisen this spring from the coronavirus pandemic.
While medical professionals do battle with COVID-19 in hospitals and nursing homes, bankers and lenders have found themselves on an economic frontline, helping businesses navigate uncertain futures under public health restrictions and closure orders.
“We’re the first responders to help salvage and restore the economy,” said Sheila Mathews, president and CEO of Four Corners Community Bank in Farmington.
For weeks, Mathews’ staff has worked nearly around the clock to gather
information to help their business clients prepare to apply for federal stimulus loans intended to bolster small businesses. Each day new guidelines were released, her staff had to scramble to gather the necessary documents and signatures.
“I think the greatest analogy that somebody used is that we are building a plane while in mid-flight,” Mathews said.
Joe Christian, president and CEO of Nusenda Credit Union, told a similar story.
“(My staff members) were working 18-hour days just to gather the information and consult with our business members, because this was a new process and some people needed some guidance to understand what the requirements were,” Christian said.
The need has been clear. In the last six weeks, many New Mexico businesses have laid off or furloughed staff, stripped operations to bare bones or closed their doors – all the while hemorrhaging the profits that allow them to pay salaries and bills.
Prepared, flexible
While the economic turmoil seems to be far from over, several financial experts say lenders are generally better equipped to handle their clients’ needs than they were the last time a major financial struck.
“Today, this is a public health crisis where we have this virus that we’re fighting against,” said Reilly White, an associate professor of finance at the University of New Mexico’s Anderson School of Management. “But in the couple of months preceding this, the economy was humming along well. Banks were well-capitalized. Their loans and balance sheets were quite strong.”
The economic stability that preceded the pandemic has allowed banks to take a more flexible and individualized approach when dealing with borrowers.
White said he has seen an increased willingness of local banks to work with their borrowers throughout the crisis.
Robert Chavez, president and CEO of Sandia Laboratory Federal Credit Union, said his bank had to quickly adapt and find ways to help keep their clients afloat like offering payment relief, loan deferment, and offering personal relief loans for members.
“The needs of our business members have changed quite significantly over the last 30 days where a lot of them are really in more of a survival mode,” Chavez said. “We’ve done more skip-a-payments in the last three days then we’ve probably done in the last three years combined. It’s just been that hefty of a situation.”
The State Employees Credit Union took a similar approach, taking steps like waiving fees and trying for flexibility, according to president and CEO Harold Dixon.
“Some of the things we did immediately was an up to a two-payment deferral on (a client’s) loan and then 90 days of interest-only on their loan just to kind of give them a good five months of relief … until things kind of get back on track,” Dixon said.
PPP woes
Still, hurdles have been significant – including helping small businesses navigate the Paycheck Protection Program.
The PPP – a multi-billion-dollar emergency loan program funded through Congress’ Coronavirus Aid, Relief and Economic Security Act – aimed to provide funding to small businesses to help them keep workers on their payroll. The loans are forgivable by the U.S. Small Business Administration if several requirements are met.
The program was originally funded at $349 billion, but ran out in less than two weeks as hurting businesses from across the country rushed to apply. Congress and the White House agreed on a deal last week to replenish the depleted fund program.
For lenders, the PPP’s rollout was rocky. Paul Stull, president of the Credit Union Association of New Mexico, said the lack of guidance from the federal government combined with quickly drafted legislation has led to confusion for both lenders and borrowers in recent weeks.
“It’s kind of like working with one hand tied behind your back to meet the needs of the borrowers,” Stull said. “It’s frustrating because the borrowers feel that we should be the experts and be able to help them and we’d really like to be but we’re not dictating what the federal government does. … It’s frustrating to the borrower because they have a right to believe that we should be able to help them and do it quickly and do it efficiently.”
Even those in the lending world who felt prepared for the PPP had difficulties when the rubber hit the road.
Alan Shettlesworth, president and CEO of Main Bank, said his organization was anticipating the passage of the CARES Act and began gathering any financial information they could in an attempt to get their clients prepared to apply. But even with that prep work, the application system proved challenging.
“We had absolutely no idea what we were doing when it came to completing the applications online with the SBA e-tran system,” he said of the online portal where loan applications were submitted.
Shettlesworth said calls and questions to the agency went unanswered, and even when the PPP’s funding ran out April 16, his bank wasn’t notified – he only learned the money was gone because applications could no longer be filed.
Need persists
White said the high volume of PPP applications shows what dire straits U.S. small businesses are in.
“They have just been overwhelmed by applications, which speaks to the need in this,” he said.
That need isn’t going anywhere. In New Mexico, business restrictions and stay at home orders are expected to stay in place for weeks yet. The fate of the oil and gas industry, which employs tens of thousands in the state, remains a question mark. Meanwhile, the virus itself isn’t beat yet.
Mathews said the demand of lenders to step up to the plate has been so great that, at her bank in Farmington, she feels her staff has hardly had time to consider the health crisis from a personal standpoint.
“We don’t have time to worry about the virus,” she said. “We’re worrying about our customers. We’re worrying about the economy.”
