Small, community banks have been punching above their weight in keeping local businesses afloat during the COVID-19 pandemic, according to head of a trade group for independent bankers.
During a webinar hosted by Economic Forum of Albuquerque Wednesday morning, Rebeca Romero Rainey, president and CEO of Independent Community Bankers of America, spoke from her Virginia home about the work local banks are doing to process loans and grants under a network of new programs from the U.S. Small Business Administration.
Romero Rainey, who was raised in Taos and worked as the chairman and CEO of Centinel Bank of Taos, said many community banks have been working without clear guidance from the SBA, with their lobbies shuttered to prevent further spread of the virus.
“It really has been extraordinary what the industry has been able to accomplish in spite of these incredible challenges,” she said.
The federal CARES Act, a $2.2 trillion coronavirus relief package passed by Congress in late March, provided funding for a handful of new programs aimed at helping small businesses. One such program, the Paycheck Protection Program, allows businesses to apply for federally backed loans that are forgiven if the business retains all of its employees for eight weeks during the pandemic.
In the first round of the program, which was plagued by technical challenges and poor communication with community banks, 8,277 loans were approved in New Mexico, totaling around $1.4 billion.
So far in the program’s second round, which began on April 27 after Congress allocated another $310 billion to the program, New Mexico banks have already processed 11,565 loans, with around $100 billion left in the program.
One key change in the program’s second round is that $60 billion was allocated for use by small and mid-sized banks.
In part thanks to that allowance, Romero Rainey said community banks have played a larger role in helping the program’s second round be more successful.
Romero Rainey said community banks were responsible for around 50% of the loans, despite housing only 20% of the nation’s assets. Rainey added this provided community banks, including the 34 that operate in New Mexico, a chance to grow by adding new small businesses as customers.
“These institutions have survived crisis, they have survived challenges, and they have come back stronger than ever,” she said.
Romero Rainey added that the ICBA is looking ahead to a new round of federal stimulus, reading through the proposals to determine their impact on community banks. One change Romero Rainey said she’d like to see is an extension to the PPP’s eight-week period, which has caused problems for some small businesses.
