Five Star Bank Stands Up for Small Businesses
As the economic shocks of the COVID-19 pandemic were just beginning to be felt, it was all-hands-on-deck at Five Star Bank for the launch of the new Paycheck Protection Program. Aimed at helping small businesses keep or rehire employees in the midst of a severe economic disruption caused by the ongoing COVID-19 pandemic, the “Triple P” quickly became one of the most visible provisions of the Coronavirus Aid, Relief, and Economic Security (CARES) Act, passed with bipartisan support and signed into law on March 27, 2020.
Five Star Bank is a high performing $1.5 billion community business bank serving the Sacramento Valley with six offices – four in the Capitol Region, one in Chico, and one in Redding. “Everybody pivoted to pitch in on PPP,” said James Beckwith, Five Star’s President and CEO, “We are only about 118 people, so we are nimble. And I could say, as CEO: this is what we’re doing now.” In the first week of PPP, Five Star had $213 million in loans in their pipeline. Before the originally allocated funding for the PPP ran out, they had processed applications for almost 900 loans.
For community lenders like Five Star Bank, membership in the Federal Home Loan Bank of San Francisco, a member-driven cooperative wholesale bank, provides reliable access to liquidity and other financial services and resources in all economic cycles. In times of disruption, having the Bank as a strong partner is even more essential. “Without the Bank, we wouldn’t be in in the Paycheck Protection Program,” Beckwith says. “We’re dealing with a pretty significant liquidity issues, and FHLB advances are important to financing on an interim basis – an absolutely necessary step.”
The chaotic rollout and subsequent rush for PPP loans was overwhelming for the Small Business Administration system, and for many of the financial institutions that tried to process the applications. When the initial window closed, 55 California banks responding to a survey about the program reported that over 38,000 small businesses that wanted a PPP loan were unable to get one. “Unfortunately, too many of these vital businesses got left at the altar,” says Beckwith, a proponent for reauthorizing the PPP with significant additional funding.
The program drew criticism when some of the “small businesses” that applied and were approved for loans included large higher-end restaurant chains and publicly-traded companies. Such companies likely had resources to put toward the PPP application process that others did not. “I’d like to see a reauthorization targeted to very small businesses. Because some of those left out may not have had the wherewithal to get what they needed done for an application if they don’t have a CPA or a large accounting department,” Beckwith notes. Lack of resources and experience would make it significantly more challenging to put together a successful loan application in a hurry.
Customers of a smaller institution can benefit from a more personal touch: it helps just to have a real person to call, when the alternative is navigating a faceless portal and its AI-powered calling system. The owners of Flatstick Pub Norcal are overflowing with gratitude for the relationship they have with Five Star Bank. “We could not be happier to have such an outstanding banking partner,” reads a note from Jenny and Brandon Robinson and their staff to Five Star Bank. “We have several colleagues and friends who have yet to get a response to their PPP inquiries via online portals. We are so proud to have such a great partner in banking!”