Q&A with Paul Holewinski

Q: With nearly a full quarter to assess the implementation of PPP, what’s your take on the overall administration of the program, including protections built in for banks by Treasury and the SBA?

A: The first couple of weeks of the program were rocky, as rules were issued, changed and then finalized.  Those were hectic times as the process was being built out as banks, clients and the SBA were all trying to figure out how to get loans/grants to businesses to avoid a cascade of small business bankruptcies.  It took a little while, but ultimately the process became well defined and the program hummed along, as evidenced by the over $550 billion in loans that were made pursuant to the PPP program.  

Q: Any hurdles yet to be cleared?

A: I believe the more challenging part of the program awaits, as banks and clients work to apply the forgiveness rules to the loans that were made.  While recent SBA rule changes that extended the Covered Period and provided greater flexibility in use of proceeds that qualify for forgiveness, more is needed to simplify the process.

Q: How confident are you that the money reached the right companies? 

A: I believe that the program worked as intended to reach those small businesses most in need.  In the PPP loans that Academy Bank made, over 91.2 percent of the loan amounts were less than $350,000 and over 60.4 percent were less $50,000.  The bank helped a lot of local small businesses keep workers employed, which was the primary intent of the program, and we took great pride in helping save jobs in our community.  The fact that approximately 20 percent of the total committed PPP loan proceeds remain unused, seems to indicate that the PPP program nationally reached the right eligible businesses in need.

Q: Could the program design have been more focused or otherwise improved?

A: The PPP program could have been and still can be improved, by making the rules, requirements and forgiveness, simpler.  It is a great program and served its purpose well but is too complicated for the ultimate program goal – grants to businesses to keep workers employed in the darkest days of the pandemic.

Q: As you work with the corporate clients who have had to completely rework their business models around reduced foot traffic, what general guidance are you giving them in terms of managing their finances?

A: Communicate, communicate, communicate.  This mantra works well in good times and bad.  Talk with your banker and help them to understand how your business is being impacted so the banker can respond to help with the financial tools at their disposal.  The specific fallout of the pandemic isn’t still fully known at this point but bridging the time between now and then will certainly require collaboration with your bank.  A business impacted by COVID that is not actively managing its situation with the help of its financial partners will likely recover much slower and suffer longer lasting impacts from the pandemic than one that is engaged with an active dialogue.  The community banking model built on relationship banking has never been more important, lean on your banker to help in these times.

Q: In a slow-growth period over the next quarter or two, perhaps the next year, what are you anticipating in terms of lending volume? 

A: We believe that lending volume is going to be down through the balance of the year as clients look to make sure they are on solid financial footing with existing credit facilities and projects before taking on additional debt.  The rate environment is very competitive right now so much of the new business will be in the form of refinance with organic growth in terms of new projects delayed until sometime in 2021.

Q: Which sectors do you consider ripe for lending volume growth, and which will be more of a challenge?

A: Some sectors are poised for growth.  Technology (data centers, storage, software, automation platforms), grocery, food and beverage household staples, packaging, medical and any business that serves or has pivoted to the work from home industry, are good candidates for future growth.  Challenged industries or product types include municipal obligations secured by tax-based revenues, schools, aerospace, entertainment venues, commercial real estate, hotels, retail, hospitality and travel have been hardest hit and will be slow to recover.