Banking on community trust and relationships to secure equitable access to PPP

It’s OK to assign serendipity, happenstance or even fate to the remarkable story of how 14 family-owned small businesses in the Phoenix-metro area secured critically needed COVID-19 federal response loans early this month. They were lucky in many ways.

But the full story of how LISC Phoenix, Bell Bank, RAIL CDC and International Rescue Committee’s Phoenix office made it possible for $1.23 million to be put into the economy of low- and moderate-income communities begins nearly a decade ago. Luck had nothing to do with that. It was hard, ground-level, ongoing work that continues to be centered on the pursuit of equitable economic development. 

Early in the COVID-19 crisis, LISC Phoenix began convening weekly meetings with community and government partners to discuss problems and brainstorm solutions. Leveraging community partnerships and matching needs to resources is a hallmark of LISC’s work. 

It just so happened that someone at a COVID-19 meeting expressed concern about small businesses having difficulty accessing the Small Business Administration Paycheck Protection Program. With the priority attention big banks administering the loans gave to established customers, microentrepreneurs who hadn’t taken out previous loans had little chance competing with larger small businesses during the first round of PPP funding.

RAIL and IRC were focused on helping small business owners navigate the second round of PPP funding as part of a plan to survive COVID-19 economic challenges. PPP was especially daunting for many of the immigrants and refugees for whom English is not their dominant language and who may not have digital access or digital literacy to complete the application process. 

Bell Bank, which has a growing presence in the Phoenix market, happened to be looking for a way to help small businesses in underserved communities access PPP. LISC Phoenix connected Bell Bank with RAIL and IRC, which set in motion an intense period of preparation, training, and collaboration leading to lifelines for small businesses. 

Malki De Silva owns Shawarma Paradise restaurant and Central Building Maintenance cleaning service in Tempe, employing a total of 13 people. She said she had high hopes of working with her banker to access PPP. 

But four days after the COVID-19 relief funds were made available, De Silva was told by her bank that she had to apply online and that the PPP money was almost gone. 

“It was disheartening,” De Silva said. “I actually really had given up on it.”

“COVID and having no more dining really hurt me and the restaurant,” De Silva said.  “In the cleaning company, I have staff who have worked for me for years, and then all of a sudden the places that they cleaned were closing because of the stay-at-home order. It was just all around a really difficult situation. “

RAIL held a helpful workshop about the PPP application process and, just as importantly, De Silva said, provided the encouragement and inspiration to stick to her goals of maintaining regular pay for her employees. 

“Literally, I promise you, without RAIL, I wouldn’t have had the opportunity even to get the money,” De Silva said of applying for a PPP loan through Bell Bank. “For me, it’s just a blessing because I get to keep [staff] employed and earning and surviving. It’s just truly a blessing.”

Kyle Kennedy, Bell Bank’s Phoenix president and Arizona banking director, said helping others isn’t just a crisis response for the bank. It’s part of its value proposition, its business culture, he said. 

“We want to work with any group where we can help, whether it’s financial literacy training, whether it’s small lending, whatever that is,” Kennedy said. “We want to partner with groups like LISC in the Valley to help the business community. We’re a retail bank as well. Any underserved community — we absolutely want to do because it’s within one of our core values.”

Terry Benelli, executive director of LISC Phoenix, said Bell Bank is leading by example.

“It’s amazing that Bell Bank put their money where their mouth is,” Benelli said. “I couldn’t be more excited.”

Bell Bank’s commitment to serve businesses in low- and moderate-income neighborhoods in the Valley speaks to the spirit and intent of the Community Reinvestment Act, Benelli said. CRA was enacted in 1977 to prevent redlining and to encourage financial institutions to meet the credit needs of all segments of their communities.

“This is exactly how the Community Reinvestment Act is supposed to work,” Benelli said. “Banks are supposed to be so intent on helping historically disadvantaged businesses and neighborhoods that they ask place-based groups to help them get the funding out the door. Community-based partners are the experts in the community and these small businesses.”

Community experts RAIL and IRC have experience working with micro- and ultra-small businesses going back about 10 years. 

RAIL is community development corporation focused on retail, art, innovation and livability in the light-rail corridor in Tempe and Mesa. It traces its origins to the successful small business assistance and creative placemaking work done during light-rail construction in downtown Mesa. As of May 8, 12 RAIL-assisted PPP loan applications were approved through Bell Bank.

IRC has had a microenterprise economic development program in place since 2011 and serves about 260 businesses owned by refugees, many of them living and working near the 19th Avenue and Camelback Road corridor. Two IRC-assisted PPP loan applications were approved through Bell Bank.

Augie Gastelum, a consultant working with RAIL, and Danielle Luna, economic empowerment supervisor at IRC, said they knew the small businesses they served — ranging from restaurants to a childcare center to an ethnic grocery market — needed help just to get to the starting line for the second round of first-come, first-serve PPP that began April 27. 

Gastelum said long-established community trust and relationships allowed for “open, frank and raw conversations” with business owners, which were crucial to meeting preparation challenges to apply for PPP.

One of the major issues with several of the businesses that RAIL assisted was they had not completed the key requirement of filing a 2019 tax return. During the last weekend in April, Gastelum worked with six tax preparers in the community to complete nine returns. The PPP application process for those small businesses would not have been successful without their cooperation. 

Both Gastelum and Luna said they were in constant communication with Bell Bank to ensure the applications were error-free and ready to be submitted when the SBA PPP loan portal opened for the second round of funds. Bell Bank’s personalized service will be important going forward as RAIL and IRC provide business ongoing technical assistance to ensure compliance for loan forgiveness.

Luna said the experience with the PPP process highlights the great need that exists among small businesses and the importance of having technical assistance programs in place to navigate processes. 

“I hope that more banks take note of the approach and continue to integrate considerations into their process for those who may otherwise be left behind,” Luna said.