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Greenville Business Magazine

Despite Complexity, Small-Business Aid Program Rescues Many

By David Dykes

South Carolina companies, corporations and nonprofits received tens of thousands of loans from the government's Paycheck Protection Program, designed to help small businesses survive the economic fallout from Covid-19.

That report comes from Kevin Dietrich, our Columbia correspondent who reviewed information from the Trump Administration regarding recipients of more than $650 billion in PPP loans.

Banks in the state took significant leadership roles in helping local businesses deal with the pain inflicted by the coronavirus pandemic.  

It certainly wasn't a perfect arrangement. In fact, the process on both sides was fraught with questions, complexity and confusing congressional mandates. 

At one point, according to the National Federation of Independent Business, nearly three-fourths of small business borrowers found the terms and conditions of the PPP loan difficult to understand, with 22 percent finding them very difficult.

Still, small banks grabbed the lead in the rescue effort and worked to process thousands of PPP loans, representing billions of dollars in direct relief to small businesses.  

Among them was Florence-based First Reliance Bank. It facilitated PPP loans for 549 customers totaling $43.7 million, according to Ben Brazell, the bank's chief administrative officer who oversees its PPP program.

His primary responsibilities are to oversee the bank's efficiency initiatives and projects. He has direct leadership of deposit operations, loan operations and information technology. But he dove headfirst into helping businesses understand PPP loan requirements and submit requests.

"There was panic in the business community," he says. “People were running around, and we were getting phone calls from non-customers, just everybody in the community."

Knowing the bank couldn't help everyone - "we just don't have the gunpowder in our balance sheet to be able to do that" - Brazell says the bank formed a referral partnership to help businesses get PPP loans. 

The most difficult part of the process, he says, was the speed at which the bank had to build out a portal for processing loans, even as the Small Business Administration sent the message,"Banks are ready, go see your banks, go get your money."

"At the time they made that announcement, the SBA had not even opened up their E-Tran system so you couldn't even submit the applications."

"You had to certainly comfort and assure your customers," Brazell says."There was panic everywhere. We helped many of our customers through the entire process."

Once its portal was built, the bank was tested by the sheer volume of loan applications in a short period of time and having to adjust to last-minute changes from the Treasury Department and the SBA.

According to figures released by the bank, 59 percent of customers receiving PPP loans received less than $100,000. Thirty-one percent received between $100,000 and $350,000. Ten percent received more than $350,000. 

No loans were declined due to underwriting. But 37 applications were withdrawn for various reasons, including receiving a loan from another financial institution or deciding not to pursue a loan, Brazell says. 

Ninety-eight percent of First Reliance's loans were to small businesses with fewer than 100 employees.

Meanwhile, Greenville-based Southern First Bancshares, the holding company for Southern First Bank, said in its second-quarter earnings report in late July that it became an approved SBA lender in March 2020 and processed 853 PPP loans for a total of $97.5 million, receiving SBA lender fee income of $3.9 million. 

As the regulations and guidance for PPP loans and the forgiveness process continued to change and evolve, however, management recognized the operational risk and complexity associated with the portfolio and decided to pursue the sale of the PPP loan portfolio to a third party "better suited to support and serve our PPP clients through the loan forgiveness process," Southern First officials said.

On June 26, 2020, Southern First completed the sale of its PPP loan portfolio to The Loan Source Inc., together with its servicing partner ACAP SME LLC.

For its part, Greenwood-based Countybank said in July it had approved more than $61 million in PPP loans for a total of more than 600 loans processed, supporting businesses in more than 25 industries.

The bank said it supported businesses of all sizes, even with loans as small as $750. 

"As a community bank, we were able to efficiently serve and support our business customers and get them the funding they need through the PPP during Covid-19," says R. Thornwell Dunlap III, Countybank president and CEO. "By being proactive and committing more than 20 percent of our workforce to this effort, we are fulfilling our mission to meet the needs of our customers and communities."

In the end, the loans for many customers were a lifeline before it was too late. And for banks, especially smaller ones, it was another opportunity to prove their value. 

One First Reliance customer, a Florence dentist, Dr. Joe Griffin, wasn't able to open his office except for patient emergencies. 

"The PPP loan really helped during the weeks we were closed and allowed us to keep our employees paid during this time," he says." I really don't know what we would've done without it. We're ready to get back to helping our dental patients and happy to be back in business."

Longtime bank customer Harry Kanos, owner of Starfire Grill restaurant in Florence, says with a PPP loan, "We were able to do business, and keep all our staff employed, but we had to do it a different way when we couldn't serve customers in the restaurant.

"This is a business we built over many years. We're just happy to be opening back up even with social distancing restrictions. I want to thank First Reliance Bank for supporting us through this. I knew I could trust them to help us."

So, in these troubled times, there are success stories. 

Let's take that to heart.