Since then, banks have become much more financially responsible, thanks to a combination of tighter rules and regulations and smarter business practices.
As a result, financial companies may be the ones helping to keep the economy afloat now that it is sinking a dozen years later due to the Covid-19 pandemic.
Small business loans in particular will be essential, and experts say banks will need to build on the efforts Washington has already put in place as part of the Small Business Administration’s new paycheck protection program.
“Unlike 2008, banks are not part of the problem. And they will be a big part of the solution, “said Dan Genter, CEO of Genter Capital Management, an investment company that owns shares of JPMorgan Chase ((, )Citigroup (( and )Truist (( – the new bank resulting from the merger of BB&T and SunTrust. )
Banks must act quickly to support small businesses
“The SBA cannot manage all the volume of loans that will be needed. The only way to meet demand is for banks to lend more, ”added Genter.
Several large banks have already started.
Goldman sach ((On Thursday, $ 300 million in aid was released, including $ 250 million in emergency loans for small businesses. )
Citigroup CEO Michael Corbat said in an interview with CNBC on Wednesday that his small business bankers responded 24 hours a day, including weekends, to business customers. And Citi does most of this digitally so that small business owners don’t have to leave their homes.
“We don’t want people to show up, so we make sure the digital interface is set up so people can apply online,” said Corbat. “We can transform this money and put it back in the hands of small businesses as quickly as possible.
CNN Business contacted several other major banks to find out what they were doing to help.
Truist told CNN Business that it has a $ 2 million commitment to support small businesses affected by the pandemic.
“For our small business customers, we’re here to help. We offer many debt relief options, including deferred loan payments and fee waivers to help meet short-term working capital requirements, as well as a special loan program with no closing costs. “Said a spokesperson for Truist.
Flexibility is the key for banks working with small businesses
TD Bank (( said he was also doing what he could for his small businesses. A spokesperson said she proposed reimbursing monthly maintenance and overdraft fees, waiving several monthly service fees and “flexibility” to repay existing loans due to difficulties resulting from the coronavirus. )
It also plans to provide loans under the payment protection program.
“TD Bank is committed to helping our business customers during this difficult time,” said the spokesperson, adding that it “will provide business loans to cover payroll, benefits, mortgage interest, utilities, rent and interest on other debts ”.
PNC (( said it is working with struggling small business customers and will offer “the option to defer payments for a period of time” and “a range of modification options with no late fees”. He also plans to participate in the SBA PPP. )
A spokesperson for US Bancorp (( said the company is reducing the rate of certain short-term small business loans by up to 2%, removing fees from businesses receiving digital payments through Zelle and reducing rates on lines of credit. )
“We recognize that many small business owners have been severely affected by COVID-19,” said the spokesperson for US Bancorp.
And one Wells fargo (( A spokesperson told CNN Business that “we are committed to supporting our small businesses in a number of ways, including streamlining payments for up to 90 days, waiving fees, deferring payments, increasing lines of credit … And by expanding aid to deposits. ” )
Wells Fargo will also provide loans through the SBA PPP.
“Our customers face challenges during the COVID-19 crisis and we want to help during this unprecedented time,” said spokesperson for Wells Fargo.
More help is needed – now
But some believe that banks and other financial companies need to do more to help small businesses afloat.
“Financial services can provide loans, but they may need more than that. The situation is serious and serious, “said Guy Goldstein, CEO of Next Insurance, an online broker for small businesses.
Next Insurance surveyed 1,000 small businesses two weeks ago and found that only 34% of them felt prepared for the current crisis while 41% have already started to cut spending.
This is one of the reasons why Goldstein said his company had reduced monthly premiums for small businesses and returned money to businesses that had already paid for annual coverage.
“The impact of the coronavirus will have a lasting effect on the economy of small businesses,” NFIB chief economist Bill Dunkelberg said on Thursday.
“The work situation in small businesses has changed. The severity and duration of the coronavirus epidemic and the mobility of the regulations imposed will determine the ability of owners to remain operational, “he added.