Q&A With . . . Mark Larrabee, Arvest Bank

Mark Larrabee is the president and chief executive officer of the Kansas City market for Arvest Bank. He talks about SBA stimulus loans and their distribution process.

Q: Have you heard yet from the SBA about any adjustments to PPP execution that will help resolve some of the issues from the first round?

A: We haven’t, but we also are hopeful they don’t make major changes. If you look back, the rules for the program came out on Thursday (April 2), hoping to roll things out on Friday at midnight. It was impossible to be fully prepared. So we’re hopeful there will not be changes in the application and we can quickly go back to borrowers from the original pipeline.

Q: Is it your sense that the money is reaching the intended targets?

A: The big thing out there really is, are the people who really qualify and have a true need the ones applying, or do those who qualify but may not have that need applying? The secretary (Steve Mnuchin, of Treasury) came out and said we’re going to be checking to make sure these certifications of need are valid. That’s a big challenge.

Q: Beyond the last-minute rules implementation, what were some of the other challenges with administering this kind of volume in Round I?

A: Starting with the original concept, it was really well-conceived, using a government program like the SBA’s 7A that was already in place and had procedures. But rather than the government doling out money, it let the banks, the ones with the money, process the paperwork. I think Treasury and the SBA came it with  different vantage points on what the objective was. Treasury was pretty insistent this would be a grant, 100 percent guaranteed; the SBA was more for putting the onus on the banks. The industry pushed back a bit at first, and said we’re not going to take that kind of risk for a one-percent loan rate, so everybody had to get on the same page.

Q: How big was the demand for you in this market?

A: We did the equivalent of 14 years’ worth of SBA product in three weeks. Their systems at SBA were constantly crashing. They just didn’t have the technical backbone to support the product. All things given, though, it went pretty well. Here in Kansas City, we did 471 loans for just under $70 million, and did some loans as small as $1,500. It takes just as much time to process a loan for $1,500 as for $150,000, but that’s our position as a community bank. We knew a couple of days before that the program was about to run out of money, but we got people to stay late that night before and got an extra 86 loans into the system that wouldn’t have made it in otherwise.

Q: Were you seeing a lot of new faces in that applicant pool?

A: We did. Some banks chose to only deal with existing customers, some only with customers who already had loans, or customers of certain size. We chose to go first-come, first served, and to tackle it at a market level. Now, we’ll prioritize it with carryover from that original pipeline, and not process new applications until we handle everyone from that. We’re trying to be egalitarian about it.