“The Times They are A-Changin” (Bob Dylan 1964)
Are YOU Prepared? By: Tom Stamborski, Liquid Capital of Illinois
Without question, much has changed since March 2020. Fueled by the COVID 19 pandemic, our world has been dramatically impacted by this medical crisis. In almost every aspect of our lives, both personal and professional, some form of change was required to deal with the multiple issues affected. Within the banking industry, bank executives, lenders and staff members witnessed the impact on their customers in general and commercial customers in particular. Some industries were harder hit, such as restaurants, hotels, hospitality, and retailers. Many businesses were scrambling to survive, with rightful concerns as to the impact on their employees, as well as the ripple effect on their suppliers and other vendors. Ironically, the pandemic presented some companies with unique and sizeable opportunities to expand their businesses or to pivot to another product or service. As the pandemic wore on, governmental programs were developed to provide some level of relief, albeit temporary. In all of these scenarios, an underlying need and theme was and is, where can I source financing? As with similar situations, where there is a gap, someone will find a way to fill the void. Many business owners turned unconventional
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• May-June 2021
lenders offering merchant cash advance loans and other types of “unsecured” loans. While this type of lending appeared attractive on the face of it, in many instances it only exacerbated the problem by subjecting the business owner to onerous terms and conditions. In responding to the needs of business owners, Congress approved various programs such PPP, CARES Act and EIDL loans. Banks initially led the way in assisting their customers with the application process, followed by the loan forgiveness process. Other third-party, non-bank lenders joined in to address the volume of applications. The congress then approved a “2nd Draw” PPP loan program for those businesses qualifying. While these programs have clearly been helpful for many businesses, the government can’t continue an open-ended level of support. Unfortunately, while helpful, these governmental programs have, in a number of instances, served to mask underlying problems and/ or give a company a false sense of confidence to overstep their bounds. With that being the case, as the financial support progressively dissipates, the scope and severity of a given company’s financial condition will become apparent. Every bank executive and commercial lender that I’ve spoken
