Community banks are irreplaceable in responding to the needs of small business clients and in helping them access the multiple rounds of the Paycheck Protection Program funding during the pandemic, Fed Governor Michelle Bowman said today. “While I have heard from community groups that small businesses struggled to navigate the PPP application process, especially those that did not have a preexisting banking relationship, community banks and [community development financial institutions]made a concerted effort to meet small business needs,” Bowman said during remarks at an industry event.
The Fed’s 2021 Small Business Credit Survey showed that small banks were the most common source for PPP loans among employer firms, Bowman said, adding that applicants that sought assistance from smaller banks were the most successful in obtaining all of the PPP funding they applied for.
“As a former community banker, I know that few understand their communities better because they live in the local economy and can step in to lend in a targeted way to those best prepared to benefit,” Bowman said.
As the recovery continues, the Federal Reserve will also continue its Fed Listens initiative in 2021 to interact with the public and community groups to hear about issues relating to its dual-mandate goals of maximum employment and price stability and to learn from a broad range of individuals, households, and communities about the economic recovery from the COVID-19 pandemic, Bowman said. “We expect these listening sessions will benefit the Federal Reserve’s ongoing policymaking process, while also providing important insights from affected communities, and enhancing transparency and public accountability.”