By Jondi Gumz
Four days after the president signed a COVID-19 relief bill authorizing $349 billion in forgivable loans for small businesses designed to help their employees keep their jobs, Santa Cruz County Bank was rarin’ to go.
The locally owned bank, which rated fourth best in the nation last year, created a pre-application online for small business owners to make it easier for them to apply.
That was before the U.S. Small Business Administration released the official guidelines for the new Payroll Protection Program ━ ambitious for a 14-year-old bank that ranks fifth in deposits in Santa Cruz County behind Wells Fargo, Bank of America, Chase, and Comerica, all older institutions with larger staffs.
Since merging with locally owned Lighthouse Bank, Santa Cruz County Bank was on track to grow to $899 million in deposits and $1.1 billion in assets, milestones reached on March 31.
Bringing the two banks together resulted in a staff of 118, and the computer systems integration putting them on the same page electronically took place as scheduled on April 5-6.
The day after, the SBA issued new guidance for the Payroll Protection Program, prompting a modern-day “gold rush” for federal money with Santa Cruz County Bank staff working nights and weekends to process six years worth of loan requests in 10 days, when the money ran out.
The end result: 29,218 jobs saved at local small businesses.
That’s simple calculation because the application requires the business owner list the number of employees.
“There’s no such things as bankers’ hours,” said Mary Anne Carson, vice president of marketing at Santa Cruz County Bank. “We do whatever it takes to get the job done.”
Once the bank gets a confirmation from SBA, the money is earmarked, and the business owner must follow through by filing required documentation in order to get the money.
Carson said at least 20 people were hired for temporary jobs to help with data input for loan processing.
Getting the loan is a multi-step process. After each application was read by bank staff, it had to be submitted to SBA’s electronic loan processing system, which was flooded with applications.
“That’s what broke down,” said Carson.
Robotic Problem
SBA officials later explained that use of “robotic processing automation” by some lenders aiming to speed up the process actually burdened the SBA system. So the SBA restricted their use.
Another problem was that larger businesses applied for larger loans — and got them. The Los Angeles Lakers got $4.6 million, Shake Shack got $10 million and the Ruth’s Chris Steak House chain got $20 million. After an uproar, all three returned the money.
Carson said Santa Cruz County Bank got applications from not just their own business owner customers but also business owners who banked elsewhere.
“We were hearing, ‘my bank isn’t doing these types of loans,’ ‘my bank isn’t accepting me.’” Carson said. “In some cases, they had deposits and the bank wouldn’t accept their application.”
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Santa Cruz County Bank is hiring to fill 10 open positions, including an e-banking specialist and a call center specialist based in Scotts Valley, and a project manager, and a customer service manager.