It was Easter 2020. The kids were looking for Easter eggs while I frantically searched for my notes. I was about to meet a client applying for the first round of the Paycheck Protection Program (PPP), an SBA-backed loan that helps companies keep their workforce employed during the COVID-19 pandemic.
Juggling between being a father and a businessman was a balancing act. The night before, I was up until 3 a.m. working with another client who was trying to correct mistakes she made on her PPP request. The funds ran out within a few weeks, and I sometimes felt more like a therapist than a banker. The business world was jostling, and so was I. I did everything I could to relay information in a timely manner and found myself repeating a good friend’s advice: Anxiety is relieved by information. So I listened attentively during internal meetings and relayed what I knew. I felt a strong link with the business world, a link which still makes me happy today to have chosen the banking field.
I always told myself that I wanted to choose a career in which I was helping people. So I studied political science at university and thought about becoming a lawyer. As I worked full time in the bank and worked on my undergraduate degree, it seemed clear that I appreciated the human side of banking.
I imagine my experiences with PPP were no different from any other banker. During that time, I worked seven-day weeks, and the intensity was nothing I had experienced in my nearly 30-year career. As I reflect, I can’t help but think about what I could have done differently or better.
How to become a more engaged banker? What can businesses and nonprofits do to better prepare for accessing capital? Who is the driving force: the borrower or the lender? When is a good time to discuss credit needs? Why have so many companies felt invisible to their banker during PPPs?
Today I came up with three main takeaways from these chaotic days.
The first was the importance of annual checks between a banker and a corporate client. Specifically, corporate financial data should be provided by customers to their banker every year. This way everyone can be proactive and bankers can educate their clients about cash flow issues or surpluses. Many borrowers turn to their banker when they need money and time is of the essence. I wonder how much more would be accomplished if a borrower proactively reviewed their company’s tax returns and other financial data every year for a check, like we do with our doctors every year.
This aggressive strategy can be useful in determining how much money a business really needs and how to best manage cash flow. No one could have predicted the financial demands during PPP days, but a regular discussion of finances would have made the application process much easier for both parties.
Access to capital is now becoming easier for our community as bankers can guide borrowers to understand their true cash flow situation. Business owners and leaders of nonprofits often set themselves up for failure by walking into a bank unprepared. Three years of detailed financial statements, preferably prepared by an external accountant, are usually required when applying for a loan. Most banks also require three years of corporate and personal income tax returns. Why not have them on the bank file so your banker can act quickly when you need funds?
The second takeaway is an additional appreciation for the power of personal relationships. This is a powerful tool for business owners and should be established before a business asks for money. This established relationship was missed by many during the PPP process. And when borrowers wanted help and contacted a customer service number, they felt lost and inaudible, leaving many unable to access funds on time.
A banker can be the best advocate for a business and a nonprofit. A strong partnership can help ensure not only access to funds, but also a strong relationship beyond transactions. Establishing this clearly takes work, but the end result can be a trusted advisor who sees the opportunity before it’s needed, which can be critical to their success. Engaging with each other ensures access during tough times.
The final point to remember is the importance of how the material is presented. This can be best accomplished by introducing your banker to your accountant. The result is organized finances and an open line of communication. Have your accountant not only prepare the financial statements but also review various financial matters so that you can easily answer the questions. Especially in times of uncertainty, this makes the loan process much smoother and allows for a quick response.
PPP becomes a distant memory, like my Easter family reunion in 2020. But every time a business applies for a loan, I’ll never forget how we came together in early 2020. A lot of our relationships have come together. solidified and the friendship business was introduced.
Bernard Bermudez is Senior Vice President, Relationship Manager at Enterprise Bank & Trust. He has over 25 years of experience in commercial banking.
This story appeared in Las Vegas Weekly.