Feature image, from the Majestic Grille’s Facebook page
“I literally had no idea what to do,” said Patrick Reilly. “I was in a complete panic.”
Mr. Reilly, owner of the Main Street restaurant and downtown icon Majestic Grille, facing the frightening unknowns that have arrived with the pandemic shutdown, had just gotten off the phone with the bank he had been in business with for the entire fifteen years as owner of the Majestic.
The bank? It wasn’t a local bank, but one of the large national banks that have been in the eye of the storm of confusion after the $2.2 trillion stimulus was enacted the last week of March.
“They told us our account was not eligible for the SBA (Small Business Administration) loan. I was told only customers that had an existing business account and an existing line of corporate credit are entitled to it. Well, I don’t have any debt, I’ve never had to borrow money. It makes no sense. And I felt like, I’m screwed.”
Reilly had anticipated working with the same national bank for the Small Business and Payroll Protections programs being offered, but found his bank’s response incredulous. “I’m a customer. They know me. They have all my records. And with their decision – instead of doing everything they can to help as many as possible – they’re doing the exact opposite of that. They should be working as a conduit, like a public service, to run these loans through like the small local banks do.”
The larger national banking institutions have claimed that their decision was made in part to protect against fraudulent claims from unknown applicants, and to work only with existing accounts to streamline the application process. But to many experts and observers, the actions of the nation’s bigger banking institutions in turning away small businesses were shameful.
Reilly was not alone in his shock, panic, and outrage.
The Wall Street Journal: “Big Banks Favor Certain Customers in $350 Billion Small-Business Loan Program”
And the New York Times:
“Small-business owners around the country are racing to secure their portion of the Paycheck Protection Program (PPP), a $349 billion relief program that Congress authorized to help them survive the pandemic and keep their employees on the payroll… Because the loans are first come first served, many business owners are panicked that the money will run out before their applications are approved. They are also trying to figure out exactly what the program does, and whether the terms make sense or if they should lay off their workers despite already skyrocketing unemployment claims.”
(A related April 15 New York Times report indicates the money in the current program has now run out, with Congress working this week on replenishing the program with billions more to keep the assistance going.)
To make matters worse, both programs have so far been plagued with problems, with some local business owners telling StoryBoard recently that they have spent the last two weeks attempting to complete their applications online, with no success. The businesses who have missed out on this round must now wait for Congress to act to replenish the funding.
The Majestic Grille, 145 S. Main, on March 22nd, the last day of take out and curbside orders. “This was an extremely tough decision,” their March 22 Facebook post said. “We wanted to continue to be there for our Memphis community, but we must turn off the lights for a bit.”
Time is Critical
Concerned that PPP funding would quickly run out and loan applications would be stopped, a staff that he had to temporarily lay off and the other usual expenses of a typical business owner, for Reilly time was already critical.
And having been turned away by his own bank, Reilly did what many do and turned to FaceBook.
With a post on Friday April 3rd, Reilly’s outcry struck a nerve with hundreds of followers. It was shared dozens of times. It was seen and commented on by many in the Downtown and restaurant community. Horrible, they said. Appalling. And, Go Local!
Dan Reid, one of the Majestic’s customers, saw the post. Reid also happens to be Memphis President of Renasant Bank. “It was a Facebook post we followed up on,” said Dan. “We introduced Renasant Bank to Patrick and our bank’s designation as a preferred SBA lender. And, we have a fast track to the SBA.”
Having that fast track, he said, helps banks like Renasant push through barriers to provide speedy assistance. As we have seen this week, speedy assistance is critical to the survival of the business. And which local bank a business banks with has made an equally critical difference.
Said Reid, “Most businesses have been impacted by the Safer at Home edict and losses of reoccurring daily sales, which have caused the business owners to furlough employees. With most small- to medium-sized businesses, employees are part of a ‘working family.’ Business owners are frustrated by having to reduce operating costs, let go of employees, etc., and then of course the dilemma of rehiring once the economy improves.”
After the call with Patrick on April 3rd, Renasant went to work. “They processed the loan for me,” he said. “They did it Saturday afternoon, worked all weekend on it. They basically saved our a—s. And now, we’re going to move all of our accounts over to Renasant.”
Reilly’s experience with Renasant has reminded him of the importance of buying and supporting local. “Local is as local does,” he said. And of the larger national banks initial actions in face of the crisis, “This isn’t just a balance sheet issue,” he said. “This is a real-world problem. We have 25,000 people here (in Memphis) in the restaurant business. Every day is a day’s lost wages for people who work paycheck to paycheck, who need that paycheck to go buy groceries.”
As per the program guidelines, 75% of the loan cover his workers’ wages for a typical work week for both “the front and back of the house” – the servers and floor staff as well as the kitchen staff – tips included, for eight weeks. The rest of the loan goes toward other operating expenses.
“Another ToGo Family Meal for our Team,” said the Majestic Grille’s April 6 Facebook post. “Laura, Lisa, Rickie, Luis, Lauren & Zach.”
As to how this crisis could change banking for local businesses, “Communication is stronger now than ever before,” Reid said. “Customers and prospects are using many sources to pull information and open up the dialogue. I believe the open communication will continue to increase locally and it has helped our bank get the word out that we are here for our customers, small, medium and large. Hence our tagline: #understandingyou.”
“I was lucky,” said Patrick Reilly. “I got the call (from Reid) out of the blue. I mean, thank God for Renasant or I don’t know what I would have done.”
“I ain’t gonna lie to ya, I don’t know what’s going to happen here,” Patrick went on to say. “But the thing is, I want to tell the stories of the good things that happened because of all of this. I mean, my landlord – Belz Enterprises – that’s been a great story. The staff has been great. And Renasant is one of those stories – the benefit of working with a local bank. There’s been a lot of good stuff coming out of this. Hopefully it’ll outweigh the bad at the end.”
Renasant Bank is the exclusive Preservation Sponsor for StoryBoard Memphis. This story was written autonomously and all interviews were performed independently.