Local Banks Are Not Serving Small Businesses
By Joan Oliver
The federal government announced funding for small businesses last week as part of the CARES Act (Coronavirus Aid, Relief, and Economic Security).
The biggest aid is the Paycheck Protection Program (PPP) where the government will grant funding for small businesses to keep their employees on the payroll and the loan will be forgiven if it's used for those purposes. Small businesses were encouraged to go to their lender, or bank, and apply starting Friday, April 3. Well, the majority, if not all, small businesses did apply and now their bank is turning them away.
My niece owns a small business in Santa Barbara County. She went to her small, local bank and was turned away because they received "too many applications." On the same day the application period opened, this bank closed down its application period. It's unclear when they closed it but my niece tried to apply before noon, so somewhere within 4 hours.
This bank, the one that has numerous commercials touting how involved they are in helping small local businesses, is now turning their own customers away without any help. The only offer was to check with other banks. My niece called every bank in town and they are only accepting loans from their own customers that opened business accounts before February 15.
I understand this has put a lot of stress on banks and based on the low interest and forgiveness, they won't be making any money off the loan, but what else are local business owners supposed to do? They can't go to another lender, they're stuck with their bank who is refusing to help them. The banks should accept an application from every single one of their business customers and then determine who qualifies and who doesn't. Turning their own customers away will result in more financial hardships for our local residents and small business community that was already suffering.
Now is the time to help, just like the banks say they do in their promotional videos and press releases.
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