Last week my partner Rob Klingler posted an impassioned plea to the SBA and bank regulators to allow banks with less than 500 employees to be borrowers under the Paycheck Protection Program, or PPP as it has become known. Rob joined a chorus of voices across the country pointing out that community banks are small businesses too, and if the jobs of employees at a community bank can be saved isn’t that as helpful to the economy as any other small business? Unfortunately, the overhang of TARP appears to continue to cloud decisions in Washington and banks were excluded from receiving loans under the PPP. Irony drips from that decision. At the beginning of the last financial crisis, when the business fortunes of some of the largest banks appeared at risk, Washington rushed to their aid with TARP. Now, at the beginning of a financial crisis that is hitting small business hard, community banks are being told they are the only small businesses in America which must soldier on without government financial assistance.

In that context, isn’t it remarkable that small and mid-sized businesses across the country are flocking to community and regional banks for responsive assistance in the PPP process? My practice has always been a mix of corporate finance and advisory work for middle market businesses and consulting and board advisory work for banks. I like the balance and the perspective that mix brings. Over the past two weeks this view into two worlds has revealed to me the true nature of relationship banking, and the absolute commitment to that concept at most community and regional banks. My clients and contacts in the middle market business world have been frequently asking for updates on the roll out of the PPP program. That was understandable and to be expected. What I did not expect was the volume of calls I’ve been receiving for referrals to smaller banks from customers of large banks. Those calls often begin with expressions of frustration at the inability to get anyone from the larger bank on a call or even to respond to an email regarding the PPP process, and that the most frequent communication received is “you need to visit our website for assistance.” In an environment where hundreds of thousands and likely millions of small to medium sized businesses across the country are suddenly struggling, and with no sense of the near term path, it really matters to the persons running those businesses that they receive support, encouragement and, if possible, assistance from their bankers. It is in the difficult times when relationship banking really matters, not the boom times.

I want to share a tangible example that should resonate with the readership of this site. On Saturday I played golf with the name partner of an accounting firm in suburban Atlanta that focuses on medium sized businesses (and yes, we can still walk our club’s golf course, which is keeping me sane). As we walked the first few holes this accountant talked about how little sleep he has been getting recently as he helps clients navigate the murky waters of the PPP roll out. I asked what the experience of his clients has been with their bankers. He stopped walking, kicked the ground, and said he is worried that a number of his clients aren’t going to benefit from the PPP funds because they can’t get adequate assistance from their banks. This accountant, like all of us involved in advising small to medium sized business owners, has concern that the $350 billion in available funds for SBA loans under the CARES Act will quickly run out. Speed in submitting an application is viewed as essential. He then looked at me and said “Thank God for regional and community banks in this market, without them many of my clients would be out of luck” in the PPP process. He then mentioned the names of several of our firm’s bank clients as making a real difference for businesses in Atlanta navigating this crazy economic environment and the PPP process.

I’ve been thinking about that conversation for several days now. Like all very good professionals, this accountant is deeply engaged in an effort to help his clients. He will remember which banks were there for his clients when the chips were down. I am also struck by how this same scene must be playing out across America. Community and regional banks, by being there for their customers in a time of real need, are making a material difference for the small to medium sized businesses that are the backbone of our nation’s economy. It should make us all proud.

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