With many small businesses struggling to circumnavigate the COVID-19 pandemic, financial institutions have an opportunity to provide them relief, and connect them with help and create long-term loyalty among accountholders.
That is what the Schaumburg, Ill.-based Raddon, a Fiserv company and provider of research, analysis and strategic guidance, prescribed in a report, “Helping Small Businesses Survive COVID-19.”
“Financial institutions should familiarize themselves with the assistance for small businesses created through the Coronavirus Aid, Relief and Economic Security (CARES) Act, and be prepared to help small businesses navigate the various resources available,” Marcus Rothaar. senior research analyst for Raddon and author of the report, said.
A few key resources listed in the report included:
- SBA Economic Injury Disaster Loans provide working capital loans up to $2 million, with loan advances of up to $10,000 made within three days of a successful application (the loan advance portion does not require repayment).
- The SBA Paycheck Protection Program provides small businesses with funds to pay up to eight weeks of payroll costs, including benefits. Funds can provide interest payment on mortgages, rent and utilities.
- The SBA Debt Relief program provides relief to small businesses with non-disaster SBA loans, covering all loan payments on these SBA loans including principal, interest and fees for six months.
- SBA Express Bridge Loans provide up to $25,000 to small businesses with a current relationship with an SBA Express Lender, expediting access to emergency funds with less paperwork.
- The Employee Retention Credit, a refundable tax credit aimed at helping businesses keep employees on their payroll. The credit, accessible to all businesses regardless of size financially impacted by COVID-19, it covers up to 50% of up to $10,000 in wages.
The Raddon report also mentioned there are many other state and local grants and resources available to assist small businesses during the pandemic.
Other initiatives financial institutions are implementing to help support small business include: A 90-day no payment window for small business loans, with no fees or late-payment reporting to credit bureaus; creating special emergency loan products; special call center lines for business clients with earlier and later hours; virtual networking to provide support and generate ideas on how to adjust business operations during the crisis; encouraging debit and credit card users to support local businesses by offering a reward incentive; reaching out to businesses using merchant card services to suggest ways the institution can support them; identifying businesses that have not downloaded or have downloaded but not activated tools such as mobile banking, and having employees equipped to help them download and set up online tools.
“Now more than ever, your online and mobile banking tools will be front and center as social distancing becomes the norm,” the report stated, adding Raddon research showed the fact that 70% of small businesses use a major bank for their primary financial institution also revealed technology is a key driver in the selection of a financial institution. “In fact, 24% of businesses using a major bank indicated they would be extremely likely to switch to a community-based institution if the technology offered was perceived to be the same.” That does not mean a major overhaul of a website is required immediately, but financial institutions should continue to highlight the digital tools available to members and try to make loans as easy as possible, if they can.
Rothaar said, “Small businesses are the economic drivers of our communities. Helping small businesses through these difficult times will help ensure they are ready and able to play a role in our collective economic recovery from the COVID-19 pandemic.” He added the current crisis is an opportunity for financial institutions to step up when it matters the most to help small business clients. “Not only is it the right thing to do, but it will also position your financial institution for future business growth after small businesses emerge victorious from the current challenges.”