Publicly traded banks in the Nashville area have loaned more than $3 billion to small businesses over the last several weeks as part of a federal aid program.
The Paycheck Protection Program provides forgivable loans through the U.S. Small Business Administration. The loans are designed to help businesses meet payroll for a few months. If business owners use the cash for payroll or some other operating expenses like rent, the loans will be forgiven.
The first round of funding for that program quickly ran out, but Congress recently approved a second round of funding to help more businesses. In all, the federal government has set aside more than $650 billion under the program.
In the first round, banks approved more than 34,000 loans for businesses in Tennessee, a total of about $6.5 billion. The second round provided funding for 41,000 more loans worth $2.4 billion.
Banks in the Nashville area have loaned more than $3 billion so far during both rounds.
Franklin Synergy Bank
Wilson Bank and Trust
Pinnacle Bank, which processed the most loans of any Nashville bank by far, approved nearly 14,000 loans worth a total of $2.4 billion for businesses in several states.
Most of that money stayed in Tennessee. The bank approved $1.39 billion in loans to more than 7,700 businesses. About $831 million of that sum went to 5,100 small businesses in Middle Tennessee.
Pinnacle loaned more than $230 million to Knoxville area companies, $186 million to Chattanooga area companies and $101 million to Memphis area companies. Pinnacle also made a significant number of loans to businesses in North Carolina, South Carolina, Georgia and Virginia.
“The initial stages of this program have been enormously helpful for our clients,” Pinnacle Chairman Rob McCabe said, according to a press release. “We look at each of the 5,000 served as a business that has been given a reprieve from severe adverse financial impact during the pandemic.”
In Middle Tennessee, Pinnacle reported that the average size of a Paycheck Protection Program loan was about $160,000. More than 90% of their Middle Tennessee loans were less than $350,000, with only 54 loans above $2 million.
Nashville banks CapStar and First Bank processed more than 1,500 Paycheck Protection Program loans each. By late April, CapStar had approved $236 million in loans, while First Bank approved $267 million.
Franklin Synergy Bank reported more than 300 approved loans worth $52 million, and InsBank reported more than 200 loans worth $45 million. The Brentwood-based bank Reliant approved more than 100 loans worth $35 million and Wilson Bank and Trust loaned $63.5 million through the program.
Although banks won’t make much money on the loans’ low interest rate — they will collect a fee for each funding — some banking leaders see the paycheck protection program as an opportunity to win some customers’ loyalty.
“I can tell you that I know personally of a number of different instances where I've gotten a call from somebody who is a customer of Wells Fargo, who's a customer of Bank of America, some of the other larger banks, and they're just getting, basically getting shut out of the PPP program,” Reliant CEO DeVan Ard said on a conference call. “So there's certainly opportunities there … I lived through the last recession here in Nashville. The banks that were still active in making loans, banks that had good asset quality, good capital were certainly able to win business away from the larger banks who kind of look at things on a national basis.”
On a conference call, CapStar CEO Tim Schools said he saw a similar opportunity.
“Our deferral and PPP leadership not only helped people in the time of need, it has built loyalty and new relationships,” Schools said. “We received so many calls from people saying their bank was not returning their messages.”
Those loan numbers will continue to grow as applications for the second round of funding continue to roll in. Reliant has already received more than 500 applications for the second round of funding, and First Bank has nearly 1,000 applications for the second round.
As of May 1, the SBA reported that slightly more than half the allocated funds had been exhausted.