Small Banks Help Small Advertising Agencies Obtain COVID PPP Loans
Legorburu had just started the application process with their local bank when the client called to let them know they had been approved for the loan.
“I called my local bank, I said, ‘Thanks guys for doing this, but I’m not going to go ahead,’” he recalls.
Three days later, Legorburu received “a very impersonal email” from the big banker telling him that the request had been denied.
“The email said they would send me a letter within the next three weeks to tell me why,” Legorburu said. “It said there was no one to talk to as they are all overwhelmed.”
Luckily for Legorburu, the local bank was still able to submit their application and get the loan.
Luck was on Legorburu’s side, but this is not the case for many small businesses that were unable to receive the PPP loan. As the initial funds ran out shortly after nominations opened, Congress approved an additional $ 310 billion in relief that businesses can request starting today.
The process has had a well documented share of problems. The New York Times reported that dozens of large companies have received payments under the program, which was designed to help small businesses pay for necessities such as employee pay and rent.
For many small agencies like Glue-IQ, obtaining the PPP loan is essential. “We are a little two-year-old freelance,” says Legorburu. “We are fully self-funded. The money in it is all my money. The PPP loan is amazing and I am incredibly grateful. It has allowed me to pay my people, and I am doing everything in my power not to lay people off.
What several executives of small branches are finding out, including the five executives interviewed for this article, is that regional banks might be their best option for getting a PPP loan.
Frances Webster, co-founder and COO of the 25-person Walrus agency, said she had to move all of the agency’s activities from a large bank to a smaller one to secure PPP funds. She declined to name the banks involved.
“There was a ton of confusion,” says Webster. “We were with a big bank but we had no luck with them.”
But then Walrus’s personal banker left the large institution where he was employed for a regional bank, which was able to guarantee Walrus’s loan. The agency is now moving all of its activities there.
“It’s all about relationships,” says Webster. “It’s really important to have a good banker, someone who supports you.”
Alan Brown, CEO of DNA, a 50-person agency based in Seattle, worked with its regional lender, Heritage Bank, to prepare for the PPP loan application process before it opened. Brown says Heritage Bank took training before the start date on how to use the site to submit claims to the Small Business Administration. “We were pretty much ready to go when it opened,” says Brown.
The process has not been smooth. Brown said the site where the PPP loan application was to be submitted was experiencing delays and his application nearly missed the window. He does not have.
Nick Paul, president and founder of the 80-person Chicago agency O’Keefe Reinhard & Paul, was also able to secure the loan through his regional bank, Wintrust.
“They were everywhere,” says Paul. “I don’t mean to say the process was easy. Uncertainty and timing [caused] increased anxiety. But if you take that part out, it’s been a great process for us. “
Paul says Wintrust sent all application materials to the OKRP by April 3. “Two days later the money was in our bank account.
Jeff Sweat, founder of the 10-person advertising company Sweat + Co., said he wanted to know the benefits of working with a small bank “a week or two early; this is something we would have attempted. Sweat, like countless other small business owners, went through his main bank, Bank of America, and did not receive the PPP loan.
According to CNN, Bank of America sent 184,000 PPP requests to the Small Business Administration and only 1,000 had been approved last Wednesday, when Ad Age spoke to Sweat.
Sweat says he hasn’t heard anything about the status of his first application, but will try the process again today for the second funding round.
“It was the most frustrating thing,” he says. “No idea if we’ve been approved,” adds Sweat. “There was no communication.”
While loans are a lifeline for small agencies whose revenues depend on fewer clients than the giants, these stores have more leeway than public agencies which operate in a quarterly shareholder-controlled pressure cooker.
Brown of DNA says he and founding president Dan Gross made the decision to “not make a profit this year,” which wouldn’t be possible if the store was owned by a publicly traded holding company.
“As a freelance, you can do it,” says Brown. “We decided that we were going to forgo any profit to keep our employees at work. Our business is all about our people.
Melissa Lentz, CEO of Magnet Global, a global network with around 25 independent agencies in the United States, said all stores in her network were able to secure the small business loan.
“The industry is all about our talent,” Lentz said, stressing the importance of the loan. Still, Lentz says stores excluded from the paycheck protection program will come out OK.
“These guys have guts,” she said. “They do not have the support of a holding company”, but “they know how to navigate [a challenged environment]. “
Lindsay Rittenhouse written for Ad Age, Crain’s sister publication.