Supporting small businesses makes a bigger impact than you may realize. When you buy a cup of coffee from the corner coffee shop, you’re helping to create a gathering place in your community. When you tip your stylist at a boutique salon, you’re fostering the local economy. When you pick up store-made treats from a nearby bakery, you’re keeping money close to home and supporting your neighborhood.
Simply put, small businesses are integral parts of local economies. According to data published by U.S. Small Business Administration (SBA) in September 2019, there are approximately 30.7 million small businesses operating in the United States; and small businesses account for 64.9% of net new job creation between 2000 and 2018.
The Impact of COVID-19 on Small Businesses
As authorities advise (or mandate) people to stay home in an effort to flatten the curve of the COVID-19 pandemic, to say that small businesses are suffering would be the understatement of the new decade.
A New York Times article points out that most small businesses have only 15 to 30 days of cash on-hand. As a likely result (according to a CNBC report from late last month), “the disruption to businesses from coronavirus could lead to 15,000 permanent retail store closures in 2020, with the Economic Policy Institute predicting that the disease outbreak could potentially wipe out three million jobs from the U.S. economy before this summer.”
On top of that, even when the global public health crisis is under control, a lot of companies expect it will take upwards of six months for their businesses to return to normal. According to the latest CNBC Global CFO Council survey, 40% of companies that already have or expect supply chain issues said it could take between three and six months to get business back to normal once the issues end – with 25% predicting six months.
How Can FIs Help?
The Coronavirus Aid, Relief, and Economic Security (CARES) Act of 2020 (H.R. 748) is the single largest financial support package the U.S. has ever seen. It includes financing options for small business owners by way of the Paycheck Protection Program (PPP) – a program designed to incentivize employers to maintain payroll during the crisis. To this end, the SBA will be providing 100% federally backed loans for certain payroll expenses through June 30 and will include up to eight weeks of forgiveness for small businesses. The loans are forgivable if employers retain employees at salary levels comparable to before the crisis. The PPP waives SBA fees and provides deferral on loan repayments for a minimum of six months to a maximum of one year.
A significant portion of the country’s more than 30 million small businesses are expected to apply for PPP loans – and you can bet that they’re going to expect immediate responses. Banks and credit unions are expected to use this unique opportunity to fund loans with new and existing small business accountholders while supporting their communities and growing small business relationships.
By simply offering these loans to your small business customers and members, you’re helping.
Ready to Lend a Hand?
New solutions like Jack Henry Lending’s platform for PPP Loans are trying to make it easier for you to do right by your community – via an automated, all-digital, borrower-friendly approach that can handle significant volume.
In an April press release, Terry Renoux, group president of Jack Henry Lending, stated, “This global pandemic has created unprecedented challenges for businesses across the country, and banks and credit unions are in a unique position to help these organizations in their time of extreme need. Our lending solution enables financial institutions to accept digital applications immediately and automatically render conditional decisions while efficiently managing the significant increase in loan requests. This is also an opportunity for financial institutions to create and strengthen relationships with small businesses, who will remember the help far after the crisis passes.”
By helping your small business customers and members through this nerve-wracking process, you’ll make a bigger impact than you may ever know.
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