Since then, banks have become much more financially responsible, thanks to a combination of more stringent rules and regulations and smarter business practices.
As a result, financial firms may be the ones to help keep the economy afloat now that it’s tanking a dozen years later due to the Covid-19 pandemic.
Banks need to act quickly to prop up small business
“The SBA can’t handle all the loan volume that will be needed. The only way to meet the demand is for the banks to lend more,” Genter added.
Several large banks have already started.
Citigroup CEO Michael Corbat said in a CNBC interview Wednesday its small business bankers are fielding questions around the clock, including weekends, from merchant customers. And Citi is doing most of this digitally so small business owners need not leave their homes.
“We don’t want to have people having to come out, so we’re making sure that we’ve got the digital interface set up so that people can apply online,” Corbat said. “We can turn this money and get it into small business hands as quickly as we can.
CNN Business reached out to several other large banks to find out what they are doing to help.
Truist told CNN Business that it has a $2 million commitment set aside to support small businesses affected by the pandemic.
“For our small business clients, we’re here to help. We’re offering numerous relief options, including deferred loan payments and fee waivers to help support short-term operating capital needs, as well as a special loan program without bank fees or closing costs,” a Truist spokesman said.
Flexibility is key for banks working with small businesses
It also plans to make Paycheck Protection Program loans as well.
“TD Bank is committed to helping our business customers during this trying time,” the spokeswoman said, adding that it will “provide loans for businesses to cover payroll, employee benefits, mortgage interest, utilities, rent and interest on other debts.
“We recognize many small business owners have been hard hit by COVID-19,” the US Bancorp spokesman said.
Wells Fargo will make loans through the SBA PPP as well.
“Our customers are experiencing challenges during the COVID-19 crisis and we want to help during these unprecedented times,” the Wells Fargo spokesman said.
More help is needed — now
But some think banks and other financial firms must do even more to help keep small businesses afloat.
“Financials can provide loans but they may need more to do than that. The situation is dire and severe,” said Guy Goldstein, CEO of Next Insurance, an online broker that caters to small businesses.
Next Insurance did a survey of 1,000 small businesses two weeks ago and found that only 34% of them felt they were prepared for the current crisis while 41% have already begun to cut expenses.
That’s one reason why Goldstein said his firm has cut monthly premiums for small business customers and is giving back some money to companies who already paid for annual coverage.
“The impact from the coronavirus will have a lasting effect on the small business economy,” said NFIB chief economist Bill Dunkelberg in a report Thursday.
“The small business labor situation has been altered. The severity and duration of the coronavirus outbreak and the mobility of regulations imposed will determine owners’ ability to remain operational,” he added.