With the economic peril caused by the COVID-19 pandemic, every small and medium-sized business (SMB) owner finds him or herself in a different situation. Some are wondering if they will survive closures or this downturn. Others are having to reinvent what they do and how they do it. Still others are tweaking their budgets to adjust to unanticipated changes in payables and/or receivables.
Business bankers also find themselves in an unforeseen and unprecedented situation. The Small Business Administration (SBA) Paycheck Protection Program (PPP) has created both opportunities and challenges for many financial institutions as they try to help disperse the funds. The overwhelming number of applications, plus the documentation requirements, have created sometimes substantial hurdles.
Yet at the same time, many bankers have been so tied up with PPP and other liquidity applications that they are missing a crucial opportunity. As a business banker, this is the perfect time to reach out to your customers to offer your help — to let SMB owners know you are there for them. Ask if they need assistance qualifying for a government program. Inquire if they need a credit card or a credit limit increase, loans, or help with crunching budget numbers.
In fact, your customers are saying this is exactly what they need —but are missing from you — right now.
Customers are struggling and feel left behind
J.D. Power & Associates has been conducting surveys of U.S. consumers every week since the COVID-19 pandemic began. About one in three respondents says they have been “severely hurt” or financially “devastated” by the economic downturn and business closures. One in four has had their family income slashed by a half or more, and most are bracing for these sudden and severe financial issues to last at least three months.
But perhaps most striking in these J.D. Power findings is people’s feelings about how their bank has responded to their crisis situation. While bankers have been working on PPP loans nearly round the clock, only one-third of consumers said that their bank has shown concern for their financial well-being. In short, bankers are working hard to help lift businesses up during this financial catastrophe, but they aren’t doing a good enough job of communicating their efforts — or perhaps it simply isn’t resonating with customers.
3 ways to help customers through this crisis
During this uniquely challenging time, the best thing you can do as a business banker is to meet your SMB owner-customers where they are.
1) Research their industry
Start by doing your research to find out what unique issues others in their industry are dealing with as a result of the pandemic. The free Vertical IQ COVID-19 webpage is a great place to start your research. You’ll find details on COVID-19 impacts to the overall economy and key sectors, as well as specific industries. There are numerous industries experiencing collateral damage that you might not immediately think of.
For example, childcare centers are considered essential businesses in most states and have thus been allowed to remain open. However, because so many parents are out of work or working from home, they have pulled their children out of daycare, thus creating a huge plummet in receivables for these businesses.
As another example, and on a more positive note, breweries are experiencing a shift in how they do business. Since tasting rooms — previously their primary source of income — are largely shuttered, some breweries have found a new income stream. They are now distributing their product directly to grocery stores, which are having their own supply chain challenges.
2) Share your learnings
Next, reach out to your SMB customer to share what you learned in your research and discuss what specific hurdles they are facing in their business. Maybe it’s something as simple as needing assistance in readjusting their budget. But perhaps it’s something more complex.
For example, many manufacturing companies that have had to lay-off or furlough people are concerned they will lose highly skilled employees once business returns. They are struggling to continue to pay these valuable workers more than what they could collect in unemployment checks. They need cash on hand to meet payroll for these employees.
To get the conversation started with your customer, print and share the “How Businesses Operate” chapter of the Vertical IQ Industry Profile for their industry. Ask them how their business has had to adjust or evolve their operations as a result of COVID-19.
Then, talk about what it will look like when they are able to open their doors again. Will they need to invest in new equipment or expand their operations in order to create more space between people? The Capital Financing chapter of the Industry Profile will give examples of equipment used in the industry to provide you with idea on potential borrowing needs.
3) Serve as a resource
Finally, and perhaps most important, be proactive with communications, be available to actively listen and answer questions, and be emotionally present. Some customers may simply need a sympathetic shoulder to lean on during this stressful time. Others may need a knowledgeable resource on everything from government and state rescue programs to private equity like angel investors and other liquidity options.
Use this opportunity to show them that you bring more to the table than just bank products and services. You are attuned to the intricacies of their industry and can offer consultative advice to help their business survive this downturn and thrive in the long-term.
A guide through the storm
Your small business banking customers are desperately looking for a guide to help them fare this storm. In fact, they may need you more now than ever before! By meeting SMB owners where they are, and serving as a trusted advisor to them and their business during this time of crisis, you will inevitably solidify your value proposition. And sharing the information you find on Vertical IQ is a great way to show them that you understand what they are going through and you have solutions to help.
We are compiling more and more details on the Vertical IQ COVID-19 webpage as an increasing amount of data becomes available. Many trade associations are getting data by polling their members, for example. They are asking members things like, “How long can you survive?”, “How much did your production drop?”, and “How are you adapting?” We are collecting their findings and sharing it on our site.
It’s not only insightful information, it can be quite validating for SMB owners in that industry who are dealing with similar challenges. We encourage you to print it and share with your customers.