Small Banks Help Small Branches Obtain Payday Loans
Luck was on Legorburu’s side, but this is not the case for many small businesses that were unable to take advantage of the PPP loan. Since the initial funds ran out shortly after nominations opened, Congress approved an additional $ 310 billion in relief for companies to apply starting today.
The process has had a well-documented share of problems. The New York Times reported that dozens of large companies have received payments under the program, which was designed to help small businesses pay for necessities such as employee pay and rent.
For many small agencies like Glue-IQ, obtaining the PPP loan is essential. “We’re a two-year freelance,” says Legorburu. “We are completely self-funded. The money in it is all my money. The PPP loan is amazing and I am extremely grateful for it. This has allowed me to pay my staff and I am doing everything in my power not to lay off.
What several executives of small branches are finding – including the five executives interviewed for this story – is that regional banks might be their best option for getting a PPP loan.
Regional banks to the rescue
Frances Webster, co-founder and managing director of the 25-person agency Walrus, says she had to move all of the agency’s activities from a large bank to a smaller one to get PPP funds. She declined to name the banks involved.
“There was a ton of confusion,” says Webster. “We were with a big bank, but we had no luck with them.”
But then Walrus’s personal banker left the large institution where he was employed for a regional bank, which was able to secure the loan for Walrus. The agency is now transferring all of its activities there.
“It’s all about relationships,” says Webster. “It’s really important to have a good banker, someone who supports you.”
Alan Brown, CEO of the 50-person Seattle-based agency DNA, worked with its regional lender, Heritage Bank, to prepare for the PPP loan application process before it opened. Brown says Heritage Bank took training before the start date on how to use the site to submit claims to the Small Business Administration. “We were pretty much ready to go when it opened,” Brown says.
The process did not go without hiccups. Brown says the site through which the PPP loan application had to be submitted was experiencing delays and his application nearly missed the window. He does not have.
Nick Paul, president and founder of the 80-person Chicago agency O’Keefe Reinhard & Paul, was also able to secure the loan through his regional bank, Wintrust.
“They were everywhere,” says Paul. “I don’t mean to say the process was easy. Uncertainty and timing [caused] increased anxiety. But if you take that part out, it’s been a great process for us. “
Paul says Wintrust sent all application materials to OKRP by April 3. “When the document was released, we basically copied and pasted all of our information and submitted this weekend,” he says. “Two days later the money was in our bank account.”
Jeff Sweat, founder of the 10-person public relations firm, Sweat + Co., said he wanted to know the benefits of working with a small bank “a week or two early; this is something we would have attempted. Sweat, like countless other small business owners, went through his main bank, Bank of America, and did not receive the PPP loan.
According to CNN, Bank of America sent 184,000 PPP requests to the Small Business Administration and only 1,000 had been approved last Wednesday, when Ad Age spoke to Sweat.
Sweat says he hasn’t heard anything about the status of his first application, but will try the process again today for the second funding round.
“It was the most frustrating thing,” he says. “No idea if we’ve been approved,” Sweat adds. “There was no communication.”
Declarations of independence
While loans are a lifeline for small agencies whose revenues depend on fewer clients than the giants, these stores have more leeway than public agencies which operate in a quarterly shareholder-controlled pressure cooker.
Brown of DNA says he and founding president Dan Gross made the decision to “not make a profit this year,” which wouldn’t be possible if the store was owned by a publicly traded holding company.
“As a freelance, you can do it,” says Brown. “We have decided to forgo any profit to keep our employees at work. Our business is all about our people. “
Melissa Lentz, CEO of Magnet Global, a global network of around 25 independent agencies in the United States, says all stores in her network were able to secure the small business loan.
“Industry is about talent,” Lentz says, stressing the importance of the loan. Still, Lentz says stores excluded from the paycheck protection program will exit.
“These guys have guts,” she said. “They do not have the support of a holding company”, but “they know how to navigate [a challenged environment]. “