FLORIDA SMALL BUSINESS DEVELOPMENT CENTER AT IRSC
COMMUNITY BANKS BENEFIT FROM WILLINGNESS TO
APPROVE PPP LOANS FOR SMALL BUSINESS OWNERS
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TCBusiness.com
In South Florida as well as around the
nation, small business owners applying
for the Paycheck Protection Program often
struck out with big lenders — even when
they had been loyal customers. They had
better luck with smaller, community banks
that were less deluged with applications
and nimbler.
According to the Small Business
Administration, about 52% of the loans
and 44% of the PPP program dollars were
approved by local community banks and
specialty lenders. That’s huge considering
that banks with less than $10 billion of
assets account for just 14% of the industry
total of deposits, according to the Federal
Deposit Insurance Corp.
“With closer proximity to the market
place, stronger ties to the community and
individual business owners, small community
banks were better able to accommodate
the volume of local small business
PPP applications,” said Clifton Vaughn,
business consultant with the Florida Small
Business Development Center at Indian
River State College. “The small institutions
were surprisingly effective and efficient in
acquiring PPP dollars for our region’s small
businesses.”
In pre-COVID-19 times, the pain of
changing banks — transferring balances
and syncing incoming and outgoing payments
to new account numbers — was a
hurdle that stopped many from making
the switch. But community banks nationwide
are reporting that small businesses,
who felt unserved by their banks, are
showing their displeasure by moving their
money elsewhere or at least opening an
additional account as a thank you for PPP
service.
And survey numbers show the trend,
too. Of businesses that secured PPP funding,
about 28% received their loan from
a lender with whom they had no prior
relationship or a bank that wasn’t their
primary one, according to a July survey of
931 firms conducted by Barlow Research
Associates. About 44% of those borrowers
said they would move at least some of
their accounts and loans to the bank that
came through for them during PPP, the
survey found.
EXPECT LANGUAGE CHANGES
Chalk this up to yet another change
coming for small business thanks to the
COVID-19 pandemic.
The language in retail and restaurant
leases is changing as a result of the pandemic.
New leases are being written with
substantial changes, particularly in regard
to provisions that provide relief for tenants
that are unable to fulfill their contract
obligations because of circumstances out
of their control, such as a natural disaster
or pandemic. The language in these provisions
is often broad, and landlords did
not interpret them to apply to shutdowns
caused by a pandemic.
Now experts are saying new clauses will
include language stating that should there
be any government-mandated business
closures — whether by city, county, state
or federal agencies — the tenant would
be protected with partial rent abatement.
That also protects the landlord, as these
agreements often add that the tenant
would need to pay a minimum rent to
cover costs like property taxes and maintenance,
he said.
Other experts have been seeing clauses
that outline what spaces are available for
extra seating, fulfilling curbside and/or
delivery orders should government restrictions
be enacted again.
“As innovative as restaurants had to
become during this pandemic, it is no surprise
that landlords are reacting with new
and innovative language in commercial
leases,” Vaughn said.
LAWSUITS STACK UP
As more small businesses grapple with
the economic impacts of the pandemic,
more than 100 South Florida businesses
have insurance cases pending in state
circuit and federal courts, according to a
database of COVID-19-related complaints
maintained by the law firm Hunton Andrews
Kurth. Among them are well-known
restaurants and attractions as well as
medical practices and manufacturers.
“Almost all of the insurance cases are
business interruption,” Walter Andrews,
partner and head of the insurance practice
A graduate of Miami-Dade College,
Florida International University and the
St. Thomas University, Clifton Vaughn
is a Florida CPA. He has more than 40
years of business experience working
in South Florida as an auditor, financial
controller, financial planner and small
business owner and operator. During
his years as a business professional, he
spent time in the airline industry, construction,
consulting with small business
owners, and teaching business
and accounting courses at Johnson
& Wales and St. Thomas universities.
Vaughn has served on the boards of
directors of the Miami-Dade Chamber
of Commerce and the Miami-Dade
Partnership for the Homeless.
group at Hunton Andrews Kurth’s Miami
office, told the South Florida Business Journal.
“Businesses have lost so much money
because of shutdown orders so I expect
we’ll keep seeing more of this litigation.”
Andrews said insurers are spinning a
false narrative when they argue they don’t
cover pandemics. He said the floodgates
should open in the next few months because
he knows his firm and several other
big firms plan to file a number of cases in
the coming weeks.
All business interruption insurance is
not alike, according to Mark Friedlander,
spokesman for the Insurance Information
Institute. He told the business journal
that some business interruption claims
in litigation are not legitimate because
BY NANCY DAHLBERG
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/TCBusiness.com