Small Banks Given Exclusive Window for PPP Applications

YOUNGSTOWN, Ohio – For eight hours Wednesday, only the country’s smallest banks were able to access the application portal for the Paycheck Protection Program, part of an effort by the U.S. Small Business Administration to ensure a level playing field.

Between 4 p.m. and midnight, only banks with less than $1 billion in assets were allowed to access the SBA’s E-Tran portal. 

The only participating financial institutions with local branches that fall into that category are Cortland Bank, Mercer County State Bank and Cardinal Credit Union.

“It did not help us at all. We were done entering all our apps in by about noon. It was a good effort by the SBA, but it was too late for us,” says Ron McNeely, chief lending officer at Mercer County State Bank.

In the second round of the Paycheck Protection Program, the Sandy Lake, Pa.,-based bank submitted just under 100 applications totaling $4 million, McNeely says.

“The first time through, it was primarily corporate borrowers and the second time has been predominantly sole proprietors and self-employed individuals,” he says. “The loan size this time around is about one third of the loan size we saw the first time.”

Officials from Cortland Bank and Cardinal Credit Union – based in Mentor, Ohio, with a branch in Austintown – could not be reached.

With $2.7 billion in assets, Farmers National Bank wasn’t able to submit applications during the window, but worked overnight to finish its backlog, says President and CEO Kevin Helmick. 

“In those eight hours, we were standing down. We cranked back up at midnight and were able to get through the remaining loans that we had in our pipeline,” he says, noting the last application in the bank’s queue was submitted around 6 a.m. Thursday.

“They’ve really tried to tailor it to get money to the small businesses in a more fair and balanced way across the country,” Helmick says of Round Two.

For the second round of the Paycheck Protection Program, Farmers has submitted about 600 loans. While he doesn’t yet have a total for the value of those applications, he says the average size is smaller than the first round. 

“To me, that’s an indication that the larger small-business customer, those who have advisers working with them, got in line and got through in Phase One,” Helmick says. “Phase Two was so important because a lot of businesses don’t have an accountant or attorney or even banker they work with every day, but they were getting around to [submitting their application]. The way the SBA decided to tier this round, I hope those people got access to the Paycheck Protection Program.”

At Mercer County State Bank, McNeely also observed a decline in Round Two, with the average loan size about a third of what it was during Round One. 

Late Wednesday, the SBA said it had approved more than 960,000 PPP applications totaling nearly $90 billion. For the second round of funding, Congress has allocated $310 billion, which includes $30 billion each for banks with assets less than $10 billion and between $10 billion and $50 billion.

On Tuesday, the federal agency barred lenders of all sizes from using automated processes to submit applications, Helmick says.

“It’ll be interesting to see the results, probably next week, of how this was all divvied up,” he says.

Early on in Round Two, which opened at 10:30 a.m. Monday, both Helmick and McNeely say their banks had issues with submitting PPP applications to the SBA.

“It was more difficult. The system was crashed and down more often and for longer periods of time than it was the first time around for us,” McNeely says. “We ended up doing a lot of our application during nontypical office hours, whether it was early in the morning or after 6 o’clock at night.”

Adds Helmick: “The process initially was difficult because they had to try to figure out how they tiered the banks. Early on, I heard the SBA was trying to figure out who was entering the loan: a $5 billion bank or someone like Chase? Once they worked through that, the system moved a lot better.”

Copyright 2021 The Business Journal, Youngstown, Ohio.