CARES Act forcing banks to focus energy on single program

To the editor:

The CARES Act, through SBA's Paycheck Protection Program (PPP), authorized hundreds of billions of dollars in forgivable loans to small businesses. Loan proceeds are primarily intended to cover payroll and preserve jobs. What's unique about PPP is that it relies solely on banks and other financial institutions to deliver loans to businesses, many of which are desperately in need of assistance. To meet this urgent demand, banks must lend their depositors' funds to businesses based on promises of repayment from government agencies. This is as far from 'business as usual” as I've ever been in my 24-year career, and it warrants additional explanation so that the public fully understands how local financial institutions are working to help their communities.

Like other businesses, banks manufacture a product. In this instance, they've been asked to manufacture a loan product based on a single piece of legislation, during a pandemic, with additional guidance and rules coming out over time in a very scattershot manner. Because funding for the program is limited, time is of the essence and demand for the product is overwhelming. The only logical, compassionate response is for banks to stop all other non-essential activities and focus on delivering PPP loans to as many local businesses as possible, as quickly and efficiently as possible.

Like many of banks across the country, Iowa State Bank has focused a majority of its resources on helping small businesses participate in SBA's unique loan program. Because PPP is brand new and rules are still being written, business owners understandably require a high degree of assistance from bankers during the application process. This means staff members work into the evening and on weekends, focused on redirecting as much money as possible back into the local economy.

Over the past week, Iowa State Bank has taken 69 PPP applications and secured $7,418,205 in funding for Iowa businesses, preserving 815 local jobs. A colleague of mine, who works for another southeast Iowa bank, reports that his organization secured $5,691,405 in funding, preserving 757 jobs in Keosauqua and Albia during the past week. Those are just two examples of the thousands of community banks working hard to deliver loans to businesses in need.

It's important that we all remain patient and work together to ensure PPP is successfully implemented. Congress and the SBA have done something similar to invoking the Defense Production Act, which requires private companies to manufacture certain products for the greater good. In this case, private financial institutions are directed to manufacture a new type of SBA loan in order to protect the economy. Despite what you may read in the news, and regardless of how you feel about the Paycheck Protection Program, a lot of bankers are working very hard to assist local businesses during this crisis.

Aaron Kness, President/CEO of Iowa State Bank & Trust Co.