Citizens National Bank Navigates PPP Loans for Local Small Businesses

By Burl Hobson Jr.

Citizens National Bank President & CEO

Special to The Messenger

CROCKETT – The Coronavirus Aid, Relief, and Economic Security (CARES) Act was passed by Congress on March 27, 2020. The CARES Act intended to provide fast and direct economic assistance for American workers, families, and small businesses, and preserve jobs for our American industries. The program is administered through the Small Business Administration (SBA) by approved SBA lenders.

The Paycheck Protection Program (PPP) is part of the Cares Act to provide small businesses with the resources they need to maintain their payroll, hire back employees who may have been laid off, and cover applicable overhead.

Citizens National Bank was not an approved SBA lender; we were required to apply with the SBA for approval to participate in the Paycheck Protection Program. Not knowing if our approval was imminent, we had to “hold off” on accepting applications. We simply could not assure our customers that we would be able to participate and did not want to delay or impede anyone from receiving the loans.

The SBA approved our application on April 2, 2020. It is our understanding that Citizens National Bank was one of the first non-approved banks to be approved by the SBA after the Cares Act. Blanket approval was subsequently given to most lenders.

The program required a considerable investment in time and personnel to understand and implement the plan. This process proved extremely challenging and, at times, frustrating. The SBA was clearly not prepared for the massive response. Rules were changed daily and often contradicted previous guidance.

With the exception of the Texas Bankers Association, various trade organizations proved to be little help as we sought specific and verifiable guidance on the program. We were often given incorrect and confusing information. Direct contact with the SBA was extremely limited. The board discussed the risk associated with moving forward with the program and decided that it was in the best interest of the bank to remain viable, serve our community, and proceed with the program.

The bank made every attempt to serve the community on a first-come basis. We did not limit the application to our customers. The bank was able to obtain SBA approval for 93% of the completed applications submitted before the program ran out of funds on April 15, 2020. SBA reopened on April 27, 2020, after another stimulus package was approved. The remaining 7% of the loans were approved with the second stimulus. Recently the SBA included relief for sole proprietors based on their 2019 Schedule C and 2019 Schedule F for agricultural businesses. Again, making it difficult for applicants that have not filed their 2019 tax returns. I encourage sole proprietors, farmers, and ranchers to have their accountants complete the required schedules if they are interested in applying for the SBA.

The noted problems with the program were unclear directives and a biased towards businesses that utilized CPA’s due to their ability to complete the application in an accurate and verifiable format. Many small businesses that were directly impacted by the pandemic were not able to compile the necessary information to complete the application in a timely manner. Due to the emphasis by the SBA that banks rely on the information submitted by the applicant, the bank was reluctant to advise the applicant on the specifics of the application except for generic instructions.

We continue to accept SBA PPP applications from the community. Applications are welcome from customers and non-customers alike. I would like to personally thank all of our customers and applicants for their patience and understanding. I would also like to thank the staff at Citizens National Bank for their hard work and endless hours to help process the PPP applications.

Please do not hesitate to contact any of our staff with questions or concerns.