The head of the Watertown Savings Bank says his bank did more than its share last month to help local businesses keep their workers employed during the coronavirus financial crisis.
Mark R. Lavarnway, CEO of Watertown Savings Bank, said the financial institution processed more applications to local small businesses than any other in the area for the federal Paycheck Protection Program, also known as PPP.
In April, the Watertown Savings Bank processed 595 loans for $60 million to Jefferson County small businesses, keeping about 8,000 employees on the payroll at the time when the local economy was shut down because of the pandemic and businesses were struggling to survive.
“For a small bank, we knocked it out of the ballpark,” he said.
Shortly before midnight on April 2, financial institutions across the country were told at the 11th hour about the perimeters of the ambitious U.S. Small Business Administration program that went into effect the next day. In the early going, a shear volume of applications that were submitted shut down the SBA’s website.
The next day, the Watertown Savings Bank started working on applications.
In 13 days, the bank processed 300 loans to businesses in the county and another 100 during the remainder of April, he said.
Retired employees were brought in and the bank reallocated staff that would normally be waiting on customers to get the PPP applications out the door.
“We worked very hard and got out an incredible number of loans,” Mr. Lavarnway said.
Small banks across the country, like the Watertown Savings Bank, were credited with processing the brunt of the applications from the PPP program. In those two weeks, $349 billion were exhausted for 1.6 million loans claimed by small business owners.
If companies keep their employees on the payroll, they are forgiven to pay back the loan. The loans are forgiven if 75 percent is used on payroll expenses and businesses must keep all of their employees working for at least 8 weeks.
Big banks, if they participated at all, were criticized for not getting the job done because they couldn’t pull off the program in a short amount of time, according to local economic development officials. There also were reports that loans went to big companies, rather than small businesses for which the loans were intended.
Some local banks also had issues with the technological aspects of processing the loans.
To gear up for PPP loans, smaller banks like Canton-based North Country Savings with locations in Ogdensburg, Potsdam, and Massena, had to act quickly to get the technology they needed to offer the loans to their customers.
“In our business people rely on decisions made in the past and the consistency of what you’ve always done, but now it’s an hour-by-hour rethinking of what needs to be done,” said Theresa A. Phalon, President and Chief Executive Officer, North Country Savings Bank. “It was a firehose of information coming at us.”
Because North Country Savings Bank isn’t an SBA lender, the transactions were done through an E-transaction business that took about seven days to ramp up.
By the end of the first round, North Country had seven loans approved of the 28 that were submitted on a first come, first serve basis, totally $512,559.
In addition, some larger banks stopped processing applications, while small banks stepped up to the plate, local economic development officials said.
Some larger banks, however, participated heavily in the program. Key Bank, for example, processed nearly 40,000 applications to date for PPP aid, totaling about $8.5 billion through the SBA, according to Matthew Pitts, the bank’s regional communications manager.
Those funds helped support companies that employ more than 3 million people nationwide, Mr. Pitts said, with about one in four of those applicants located in low-to-moderate income communities and about 6% have been for non-profits employing around 220,000 people.
“We are continuing to process applications as long as funds remain available in the program so that we can help as many of our clients as possible,” Mr. Pitts said.
In the north country, Watertown Savings Bank processed 400 loans during the first round and another 200 in the second, compared to about 100 loans by the other local banks combined.
Since all the funding was used up in the first round of PPP, a second round began in early May with $320 billion appropriated. While it took 13 days to go through the $349 billion in the first round, about $100 billion still remains available at the end of May. The PPP funding has been extended during the second round.
“It’s been very, very slow,” Mr. Lavarnway said.
The emergency loans in the second round aren’t in demand as they were during the first round, said Elizabeth R. Lonergan, regional director for the Small Business Development Center at Jefferson Community College.
While the hospitality and retail industries have been hit hard by the pandemic, north country unemployment is less than had been anticipated, she explained. Businesses also don’t want to take on risks of another loan.
Donald W. Rutherford, CEO of the Watertown Local Development Corporation, said business owners don’t want to take on further debt. Only six businesses applied for emergency loans through the local development corporation, also known as the Watertown Trust.
“They want to wait to see what happens when they open,” he said.
A third round of PPP is being discussed in Washington and is focused on making changes in how it works. One of the changes could be extending the length of time to pay back the loans from 8 weeks to 24 weeks to help businesses that have been shut down for two months, bankers said.
Reporter Julie Abbass contributed to the story.