Brace Yourself for a PPP Loan Forgiveness Frenzy

Let’s start with a seemingly off-the-wall question: What’s the Transitive Law in mathematics?  Why?  Well, contemplate this equation from page 7 of the SBA’s 11-page PPP Loan Forgiveness application:

  1. Enter the annual salary or hourly wage as of February 15, 2020: ______________. b. Enter the average annual salary or hourly wage between February 15, 2020 and April 26, 2020: ______________. If 2.b. is equal to or greater than 2.a., skip to Step 3. Otherwise, proceed to 2.c. c. Enter the average annual salary or hourly wage as of June 30, 2020: ______________. If 2.c. is equal to or greater than 2.a., the Salary/Hourly Wage Reduction Safe Harbor has been met – enter zero in the column above box 3 for that employee. Otherwise proceed to Step 3.

This is just one example of many. It’s no wonder that bankers are more than a bit concerned about what the loan forgiveness future may hold for their institutions, given the complexities and uncertainties that have haunted this program from the beginning. With roughly 4.4 million PPP loans processed for a total of nearly $515 billion, banks need to prepare for what could be a forgiveness frenzy.

In a May 22 article in Bloomberg, “Millions of PPP loan forgiveness requests are about to rain on banks,” several industry leaders alluded to just a few of what they see as the challenges ahead:

“The document is complex, so it will fall to lenders to help borrowers complete it. I would equate this to just as heavy if not a heavier lift to processing the loans themselves. For most lending businesses, you may be doing this full-time for no revenue.” -   Libby Morris, Head of U.S. Operations, Funding Circle Holdings Plc.

In a May 22 article in Bloomberg, “Millions of PPP loan forgiveness requests are about to rain on banks,” several industry leaders alluded to just a few of what they see as the challenges ahead:

“The document is complex, so it will fall to lenders to help borrowers complete it. I would equate this to just as heavy if not a heavier lift to processing the loans themselves. For most lending businesses, you may be doing this full-time for no revenue.” -   Libby Morris, Head of U.S. Operations, Funding Circle Holdings Plc.

“Businesses are still looking for clarity on whether employee bonuses and some health insurance and retirement plans count as payroll.”  -   Joan Vines, a Managing Director at BDO USA LLP

“Many businesses may find they fail to meet SBA terms for forgiveness, which will leave banks with loans to service and customer issues to resolve.”  -   Josh Knauer, General Partner, JumpScale

“Hopefully it doesn’t all come at one time and we can stagger it over a period of time, but I do believe there’s going to be a lot of hand-holding associated with it.” -   Ira Robbins, CEO, Valley National Bancorp

Here is what your PPP loan borrowers are up against; unclear, shifting guidelines and definitions, as well as a daunting, 11-page PPP Loan Forgiveness Application that makes a 1040 return look like a third grade social studies quiz. The SBA also makes it clear in this application that while all borrowers are “eligible,” there is no guarantee that a request will be granted.

Where does this leave lenders? According to Knauer, lenders will have “a massive customer-relations problem with the companies they’re lending to. More time will have to be spent on the phone, more audits are going to have to be done, with a lot of digging into every single line item of expense.”  And Robbins predicts that his bank will need to commit as many employees – 500 out of 3,200 – to deal with forgiveness requests as were needed to process the loans.

Forward-thinking institutions are doing just that; thinking forward and taking a proactive approach to the processing of PPP loan forgiveness requests. These banks are marketing advisory services early in the application process with a view to avoiding, as Knauer puts it, “a massive customer relations problem.”

The marketing communication materials offered by BankMarketingCenter.com can help banks get a message out to borrowers that will stem the forgiveness frenzy tide. First of all, it’s essential that institutions continue to guide their PPP borrowers down the road of forgiveness with frequent reminders of the forgiveness guidelines, which are:

  • Track all transactions for which PPP funds are used and keep all related receipts
  • Keep accurate payroll records so you can show that at least 75% of your loan went to payroll costs. (PS: As of this writing, Congress is considering revising the 75% to 50%. According to Forbes Magazine’s, Good News For Small Businesses: Congress Could Extend PPP Loan Forgiveness Period,” there is enough support in Congress to extend the eight-week period that Paycheck Protection Program loan recipients have to use the money, as well as relaxing the 75 percent payroll requirement.”
  • Keep accurate non-payroll covered expenses, such as payment of interest on mortgage, rents on leasing agreements, and payments for utilities.

Secondly, institutions need to get ahead of the forgiveness process confusion with messaging that helps their borrowers complete their applications. That message could center around a webinar, for instance, that reviews the process guidelines and takes borrowers through their forgiveness application.  It might also, as in the case with the Illinois Bankers Association, tout a partnership with a third-party “forgiveness solution” provider, as recently announced by the association: “After evaluating a number of solutions, the Illinois Bankers Business Services Board has chosen to partner with Abrigo and their PPP Forgiveness & Administration solution… which manages the full lifecycle of the PPP loan, from loan forgiveness calculations to auto-populating Form 3508.”

The forgiveness process is a complex one, but the program will hopefully provide businesses with the funding they need to stay afloat. Is it all worth it, in the end?  Even the SBA seems uncertain. In its Rules and Regulations document, the association offers this assessment: “We anticipate that this rule will result in substantial benefits to small businesses, their employees, and the communities they serve. However, we lack data to estimate the effects of this rule.”

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Their Credit Needs Protection, Too.

About 33 million Americans have filed jobless claims since mid-March. The unemployment rate has skyrocketed to nearly 15 percent, the highest level since the Great Depression, and the U.S. workforce has lost an unprecedented 36.5 million jobs. According to a Fidelity Investments study on Market Sentiment, nearly half of those surveyed said that because the of the demands of work (or looking for work), and home (with social distancing, children at home, etc.), they have not dedicated any time whatsoever to addressing their financial futures. That’s changing, however, as the Covid-19 threat appears to ebb, and Americans begin to focus on a much more optimistic future. 

In “Should I care about my credit score during Covid-19,” author Taylor Moore on nextadvisor.com says, “With unemployment rates at a historic high and a contagious virus on the rampage, it may seem frivolous to think about managing one's credit score at a time like this, but it’s an important component of your financial health that will follow you past the pandemic and into the future. And right now, there’s a lot of confusion about what gets counted in your credit history.”  The phrase “a lot of confusion” could be considered a real understatement, given the amount of confusing, and often conflicting, information regarding credit score management and reporting. As bankers, it’s critical that we, of course, continue to be that expert advisor to our customers, providing them with much-needed financial products and services.

One of those critical services is guidance, especially at this moment, in managing their credit. How should you advise them and, hopefully, bring some clarity to what they’ve seen and heard?  Here are a few things:  

  1. Monitoring credit closely: Free weekly credit reports are now being made available by the major reporting agencies and can be accessed simply by visiting AnnualCreditReport.com. Whether or not they’ve missed any payments, staying on top of credit reports and scores is always a good idea. Should inaccurate information be found – in the case, for instance, of fraud or identity theft – actions can be taken in a timely manner to limit exposure.
  2. Prioritizing debt: According to US News, this starts with “taking advantage of the CARES Act and the temporary credit score protection offered to those who are unable to make their minimum monthly payments.” If their accounts are currently in good standing, your customers can ask their lenders for payment accommodations. Then, if they can pay some of their bills but not all of them, they should prioritize based on the two different types: secured and unsecured. Paying secured debts first, i.e. mortgage and auto, ensures that they do not lose their home or vehicle.
  3. Making every effort to make payments on time: While it may get difficult, it’s best to make at least a minimum debt payment by its due date every month. Credit scores are greatly impacted by late or missed payments. If your customers hope to emerge on the other end of this crisis with a credit score that will serve them well, they should make every attempt to maintain on-time repayment even if they’re only paying the minimum amount. 


When it comes to important matters that can have a long-lasting impact on such things as credit, financial institutions have not just an opportunity, but a responsibility to keep their customers informed. Take this opportunity to be the trusted advisor that your customers need.

For more information on how BankMarketingCenter.com can help you with communicating vital information to your customers – for example, with our ads focused on credit score management during Covid-19 – visit bankmarketingcenter.com.  Or, you can contact me directly by phone at 678-528-6688 or at nreynolds@bankmarketingcenter.com.  As always, I would love to hear your thoughts on this subject.


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Banker Action Figures? You Never Know…

With more than 80,000 people dead and nearly 35 million out of a job, America is desperate for some good news. 

According to an April 17 McKinsey & Company article, “A leader’s guide: Communicating with teams, stakeholders, and communities during COVID-19,” crises can produce great leaders and communicators, those whose words and actions comfort in the present, restore faith in the long term, and are remembered long after the crisis has been quelled.”  The same, of course, can be said not just of leaders and communicators, but companies and brands.

What’s a great example of a brand “that will be remembered long after the crisis”? Mattel, for its Play It Forward program.

Mattel is “playing it forward” with a new set of “Thank You Heroes” that celebrate the selfless courage of essential workers and first responders. According to the company’s website: “We're talking about those brave souls who carry on doing their jobs despite the risks in order to keep the rest of us safe, secure and healthy. We salute these heroes, and we think they're pretty amazing role models for kids. Let's play their heroism forward by lending a helping hand and sharing a little gratitude.” With each online action figure of the #ThankYouHeroes Collection sold, $15 is donated to FirstRespondersFirst, a fund dedicated to providing essential supplies, equipment and resources for frontline healthcare workers and their families. In another recent promotion, Mattel donated one Barbie Career Collection doll for every doll sold to the First Responder’s Children Foundation, which to date has:

  • Funded more than 11,000 hotel room nights for first responders who couldn’t go home
  • Awarded more than $1 million in immediate grants to hundreds of first responders with financial hardship due to COVID-19.
  • Distributed more than 100,000 FDA certified, surgical grade masks to first responders
  • Paid for funerals of first responders who have died from COVID-19, and
  • Continues a 19-year mission funding college scholarships that benefit children of first responder parents killed or injured in the line of duty.

But Mattel’s roster of superheroes may not be complete.  And here are just a couple of examples.

Like all community banks, Jill Castillas Citizens Bank of Edmond is doing its best to ensure the safety of customers, while taking some innovative steps to maintain the level of service that customers need and deserve. In order to encourage drive-thru use and make it work, the team at Citizens Bank of Edmond “came together and adopted a Chick-fil-A mentality,” Castilla says, “where we use walkie-talkies and tool belts and try to assist customers with our drive through.” With the bank’s new curbside service, customers can actually go on the bank’s website and make an appointment for a particular service, which they can then transact in the bank’s parking lot. “You can not only select the service you need with the day and time, but can also request a particular employee with whom you’d like to meet.”  The bank is also offering limited lobby service by adopting the “restaurant-style” use of buzzers that alert customers to when they can enter the lobby.  One of the beauties of the buzzer system is that, according to Castilla, “the buzzers travel far enough that a customer can visit a downtown shop or restaurant while waiting!” 

And then there’s Zach Turner, who manages the Regions Bank in Ooltewah, Tennessee where as recounted in American Banker’s “Coronavirus through the eyes of front-line bankers,” his bank was faced not just with a pandemic and an economic crisis, but a natural disaster, as well. “As if a global pandemic wasn’t enough of a challenge, seven tornadoes hit the Tennessee Valley in mid-April. Bankers and customers alike faced ruined infrastructure and internet and power outages. Once Turner’s branch got back up and running, his team pivoted to helping customers handle large insurance payments related to the natural disaster.”

As Dave Martin pointed out in his American Banker article, “many banks are deferring payments, lowering rates and often providing additional financing (at extremely low rates) for customers to be able pay the money owed to their own suppliers, for example. These efforts were not brought on by a government edict. In a time in which days matter — and government agencies take weeks to respond — the nations’ banks are standing among the economy’s first responders.”

Do you think Mattel might add a community banker to their action figure collection?  We think they should.  What do you think?

About Bank Marketing Center 

Here at bankmarketingcenter.com, our goal is to help you with that topical, compelling communication with customers; the messaging — developed by banking industry marketing professionals, well trained in the thinking behind effective marketing communication — that will help you build trust, relationships, and revenue. 

To view our marketing creative, both print and digital – ranging from product and brand ads to social media and in branch signage – visit bankmarketingcenter.com.  You can also contact me directly by phone at 678-528-6688 or via email at nreynolds@bankmarketingcenter.com. As always, I welcome your thoughts.


How the Paycheck Protection Program showed the True Worth of Community Banks.

It took a vicious virus and the Paycheck Protection Program (PPP) to show the American people the true worth of Community Banks. Yes, the Bank of Americas of the world do have more technology, more branches, more marketing muscle, more ATMs, and more employees. But, the Community Banks seemed to have a passion for taking care of their customers and their local community that, frankly, seemed a bit lacking on the big bank front.

I know many, if not most, of these community bankers worked all during Easter weekend to help their local businesses apply for what turned out to be, of course, extremely limited (and competitively-sought-after) PPP funding. They worked from home, many hours day and night, to protect their customers and their community. Their efforts paid off. Rob Nichols, CEO of the American Bankers Association, reported a couple of weeks ago that 60 percent of the PPP loans made to date have been made by community banks throughout the country.

I know someone who has been a customer of Bank of American for 35 years. They were not so fortunate.

On April 3rd, at 8:00 am, on the opening day for PPP applications, they called and emailed their “BOA, Small Business Banker” asking about how they should apply for the PPP.  A couple of hours later they received an email saying “Please go to www.bankofamerica.com/sbresources to apply, the site is live.”

When they went to the site, it said they had to have a “pre-existing business lending and business deposit relationship with BOA”.

Fortunately, or in this case unfortunately, they have no debt. And by this time, their BOA Small Business Banker’s voice mail was full and she wasn’t returning emails. 

On Monday, April 6th, after a national outcry from angry customers, Bank of America had reversed its ridiculous decision and would allow businesses to apply if they had a “Small Business checking account opened no later than February 15, 2020, and do not have a business credit or borrowing relationship with another bank.” Within minutes they applied and received an email stating “Your application has been submitted”. 

On Thursday, April 8th, they received a phone call from an individual stating that they were with Bank of America and wanted to confirm that they had uploaded their documents for the PPP.  The BOA representative wasn’t even able to access the files and had no idea what had been uploaded.

A week later, on April 15th, they received an email from BOA stating, “We need additional information to process your Paycheck Protection Program Application. After logging in you'll be prompted to update your business information.”

Guess what? There was no prompt and no help button. And obviously no one to speak with. In multiple places on their emails and website they state: “Any communication about the process and your loan will occur through your IntraLinks workspace OR via a call from our underwriting centers. Bank representatives are unable to discuss eligibility with Applicants or assist Applicants in competing the application materials.”

After hearing about how many community bankers worked over Easter weekend and how many PPP loans the community banks were making, they contacted a local community bank, Signature Bank in Sandy Springs, GA. They spoke with a real person and were told exactly what they needed to do.  In less than 24 hours they received an email from Signature Bank that their PPP loan request had been approved!

They have yet to hear from Bank of America and don’t even expect to.

I don’t think BOA ever intended to make PPP loans to customers that didn’t have loans with them. They just changed their website to make it look that way. It became obvious that BOA was not in business to help the local small businesses. And that’s not just my opinion. It’s also the opinion expressed by the Wall Street Journal in their April 6 article, “Big Banks Favor Certain Customers in $350 Billion Small-Business Loan Program”.  According to The Journal, many applications were denied because the applicant “hadn’t borrowed from BOA in the past.”

To be fair to BOA, they were not the only big bank that found themselves tripping over their own feet over the last couple of months. In an Alignable article by Eric Groves entitled, “JP Morgan Chase turns it’s back on Small Business Clients,” Groves points out that “Chase decided to serve the needs of larger clients while ignoring small business owners when they needed this financial powerhouse the most. Clients were told they should not open up applications with other financial institutions if they were going to submit with Chase. The bank then processed only 27,307 loan applications to reach a whopping total of $14 billion in CARES Act Relief. Their average loan size was over $500,0000, generating over $200,000,000 in processing fees for themselves.”

Our company, BankMarketingCenter.com, works with over 250 community banks and I am so proud of all of them. They have shown their true worth during this economic crisis. Cheers! The secret now is for these community banks is to make sure they supply these small businesses with all the products and services offered by the larger banks, including remote deposit capture, mobile banking, and payroll services. They also need to continue to do a good job of messaging; letting their customers know that they appreciate them, and that they are there for them with the assistance they need right now, from loans to investment products.

As the saying goes, sometimes you have to get sick in order to feel better. What this crisis has shown, through a sickness in both health and wealth, is that community banks, and community bankers, really care.  Congratulations on a job well done!