Bank CEO on PPP Loan Chaos: Inside the First Days of $350 Billion in Emergency Lending

Vance Crowe [00:00:03] As the crow flies on the Bands Chrome podcast, Travis Liebig. Welcome back to the podcast. Hey, good morning, how are you? So for listeners that didn't hear earlier last week, you are the CEO of St. Louis Bank of which I'm a member of the Board of Directors, and you're the first guest I've had on a second time. But I think it's because so much has been changing with this PPP program and the SBAs that you and I decided, Hey, let's get on. Let's talk about the types of questions you're getting, the types of challenges. First before we get started, last time we spoke, you were getting ready for an onslaught of people applying for this care care package or this care act. What has happened since we last spoke?

Travis Liebig [00:00:49] I think to use one of your common terms, chaos, I would say as, as ensued, but you know, the, we, we were very well prepared, I think better prepared than most to be able to accept and get a lot of the level of interest inquiries from business owners. So that was our first step in this process, was let people know we're here to help 'em and we're gonna help 'em, give them an a, a link to put in their information because the applications are not able to be taken or submitted yet, but get 'em in here, let 'em know we're gonna be able to, to help 'em. Since then, now we have tested the process that we built to be able to process the, these loans. And what that looks like, you know, for those that you know, are probably listing or watching is these applications get submitted into the bank and it's a very short and simple application, but there's a lot of documentation that has to come along with that to back up the numbers that you've put in there relating to your payroll costs for your company. That's where the interaction is taking place on either I have questions before I submit this to the bank, or the bank then has questions for the borrower, for the business owner that, because either it was put in in incorrectly or maybe it lacked information. And that is where I'd say the biggest bottleneck right now for us is we certainly know that speed and communication is everything right now as borrowers are very anxious, hearing a lot of things out there, am I going to be able to get my loan, is what they want to know.

Vance Crowe [00:02:18] Yeah. And I find it interesting. So even myself, I went through my accounting and I made sure all everything was up to date, that all my numbers and paperwork, and then went to submit it. And I'm in a, in a weird place like I don't get PPP because I, I don't have employees. So you run into these things where people are thinking, Hey, maybe I should be applying for this or getting involved. They get things together, what's happening as they come to you and say, Hey, I'm, I'm looking at getting this done

Travis Liebig [00:02:45] For sure. Yeah. And I'll, you know, share a lot of comments and none of this is disparaging any of the groups that were involved in putting this together, because I think in theory this was a phenomenal bit of legislation that got put into practice, and then now it's the chance to be able to get the dollars in the hands of, of the business owners. But you know, the old saying, the the, the road to hell is paved with good intentions is exactly the way I would sum this thing up right now, this, this was a great, this was a great plan and it means well and it will do well, but because it wasn't fully baked and a lot of the details couldn't have been put into the, the practice, the bankers and really any group, whether they be a bank or a non-bank trying to facilitate these, they need clarity. Because the biggest thing on these, for banks to be able to do them quickly and efficiently is that guarantee from the federal government. So that's a wonderful thing to back that guarantee up. You have to have these things documented correctly. So that's just a kind of opening broad statement here on the subject that the plan is great and the business owners who need it should get the resources. But everything in between is where there's really a breakdown because the changes that continue to happen, we had a number of clients that were ready to apply, had all their forms filled out, and then things changed. So we need to make sure that those forms changed, that that got updated for, for the borrower. So we're just trying to do this the right way. We also know that speed is everything, but what is probably missing right now outta this whole process if I'm a business owner, at least in most cases, is, okay, I've got my, my application in now I want to talk to somebody, or before I can submit my application, I wanna talk to somebody.

Travis Liebig [00:04:28] And to frame this, this is the way we talked about in a team meeting yesterday, was, what is taking place right now in all of the banks? All banks have many, many thousands, if not hundreds of thousands of customers. And to put it in perspective, think about what would take place inside of any company or any organization if every single one of your customers showed up at the exact same time wanting answers on a program that was going to give them free money, but they better get the answers before the money runs out. So you talk about anxiety and things that are building out there with the customer base. I'll tell you that every banker that is is sitting in my shoes for sure, if not in, in any part of this process, once these dollars out instantly if possible, because that's what we are here to do. So there's a number of things that are going on inside of the process that are tended to be, you know, built the right way, but they're changing and they're not. But I won't throw that out there as a fear thing at this point because all the banks are in the kinda the same boat. Some are getting faster and better in this process as as, as we certainly have proven. But how do we tell these borrowers that, look, everything's gonna be just fine. We're gonna have some questions, but furthermore, how do we then prioritize the ones that absolutely need the dollars right now? Because every business can get this loan if they fit, you know, in the, in the size and the next codes. But not everyone, I think has the same need at this moment in time to pay that employee on the next payroll that a lot of 'em are gonna have to fund tomorrow through their payroll services provider.

Travis Liebig [00:06:05] So there's anxiety and we know it, we acknowledge it, and honestly it's, we're not looking for any sympathy on our part. It's the opposite of how can we provide business owners with the clarity that they need instantly to get them moving through the chain and get the dollars out the door as fast as possible.

Vance Crowe [00:06:22] So it is April 7th, 2020. Have you distributed any money to people that have applied for this PPP?

Travis Liebig [00:06:29] That is what today is. So we, that's probably a really good point. If you probably heard in the news last week, there were a number of non-bank lenders and some banks and some that I was aware of in the, in the area too that were saying that they were funding loans under the PPP protection program or this, this payment program. But in reality, they weren't because they couldn't, they were perhaps maybe doing a short term bridge loan or something for a very small borrower to get 'em some dollars to make that next payroll. And I find that very admirable and I'm all about it. But what we also saw were some organizations doing that, I think probably to show that, hey, look, we're ahead of the curve and we've built a better process than other banks in the market, and I don't care what everybody else does. But what that was doing was putting even more fear in the business community that, wait a second, if they're getting their money, where's mine? And if you think about the scene from, it's a wonderful life where everybody's running into that bank and they want to get their money before, you know, before the, you know, the, the bank fails. That's kind of the same kind of mentality I think that we're feeling right now. Banks aren't failing, banks are strong as hell, but they want their money under this program before it runs out. And you know, by all means they're going to get it. So then you got people trying to switch to different lenders who actually probably aren't any further along in the process, but that puts the borrower at risk because they're gonna get a loan that doesn't have all the i's dotted and t's crossed for what the government put out here for them to get.

Travis Liebig [00:08:03] But we have seen some banks, at least starting late yesterday, getting some of these finally through the chain and actually getting documents. But what we're trying to do, and, and I think this is the biggest thing for everybody, is how quickly can we get them their approval or commitment to say you're good. So that I think is what

Vance Crowe [00:08:20] Just 'cause that knowledge would be, would be everything.

Travis Liebig [00:08:23] You bet. And then, and then from those folks, if you absolutely, you know, need this thing today, let us know. We're gonna figure out ways to get there. But you know, the most part, it's the lack of clarity. And I've talked to several businesses that are outside of our area that we're not, we're not, not working, but friends that are running companies, and some of 'em have applied with the, the big banks and the big banks made that process pretty darn easy. But some of 'em delayed their process to get, to get it up and running, but they made the process easy to apply and then now it fell into a black hole. And then we're on the other side of it, making the process easy, maybe not quite as easy through a couple of things, but actually today we'll go live on some things that will put us in that same peer group. But the lack of clarity that they're, they have after they submit with the bigs, we're trying to be the best of both means apply and be able to talk to a banker. So those are a lot of things that just human behavior requires speed, it requires efficiency, it requires, you know, clarity, at least in this process specifically. Well,

Vance Crowe [00:09:27] So, you know, I am much more of like a freelance go out, be a cowboy. And I think you're kind of the, the opposite to me. We've, we've always been a big yin yang where you've been like, I want to know what the rules are. I want to know how the structure is set up. You're in this weird scenario where this is not really a process as much as it is a dance, right? You're figuring out with the customer what they need and then what the government is going to offer. But yet you have to give guidance to your employees Who are the ones that are actually executing this stuff? What are you talking about with your employees? How are you empowering them to have conversations in a time when nobody really knows anything and really we're trying to figure out which dance we're doing.

Travis Liebig [00:10:10] Yeah, I think there needs to be some level of assurance that is given to the borrower through the employees that, you know, lets them know that, that we got you and just, you know, and this doesn't help them in that, that time, but I think it does help give some clarity that we got. And then we just got another thousand of you right at the same time. So now is getting these things as fast as possible processed through the system because you get the paperwork in, you underwrite it, the underwriting's super easy. You're basically just, you know, checking the, the numbers that are, are put in on the payroll specific for borrowers. However, a lot of times that information was inadvertently put in incorrectly. So we gotta get back and, and correct it or forms were missing. So that then happens, then it gets approved and then you notify the customer, Hey, look, you're approved, you're good to go. We're gonna work towards getting documents. And then there's that next step in there to just get the, the loan documentation completed. So at each stage, every bank has a, a normal number of resources built for pretty normal times, whatever that may be. But then if you said, okay, let's try to use our same resources and our same process for every single customer in the bank at the same time in a matter of days, that's where you have the strain and the pain. It will, it, things will continue to work out and we will get these loans done. The, to put this in frame of reference though, banks last year from the SBA lending program, did, you know, I think it was, don't quote me on this, but I think it was a 20 billion or $50 billion under the SBA program.

Travis Liebig [00:11:46] Let's just say it's 50 billion. This is, that was over a course of a year. This is, we're gonna do 350 billion over the course of a month or 60 days. So you're taking and just saying, all right, let's do about 10 times what we did last year in loans out the door, but let's do it in, you know, 20% of the time. So it's just a very weird situation. And I think hindsight's always 2020, if there could have been a little bit more time for them to get all the rules of the game laid out and then have, you know, the organizations that are providing these loans a little more time to get their processes right. We wouldn't be probably in this situation that we're in now, but I don't think that our government and the SBA are gonna let business owners down. I just can't imagine that that would be the case. So if the 350 billion does perhaps get used up, I think it would be, you know, political quagmire for them to be stepping into to let those businesses that were in the queue that just didn't get there fast enough to be able to let not let them fail without getting the dollar. So I do feel like at least there's mental comfort there that if this ran out, there's another stimulus package that could come down. This is and should be more time spending right now that get the dollars to the organizations that need to come back to life when we come back to life.

Vance Crowe [00:13:08] So Travis, you're at the helm of St. Louis Bank and you've already said the thing that the path to hell is, or the road to hell is paved with good intentions. How are you talking with your employees? What are you talking with them about as you're, I mean, you're essentially saying, we're headed into a dark place. Tell, tell me about that.

Travis Liebig [00:13:28] Yeah, I, I think you need to shoot people straight and let 'em, you know, just acknowledge what it is. And yesterday we had our weekly all hands call and remember everybody's working remotely so we can't just jump into a room and have these conversations and people are working remotely. And my biggest concern outside of this program was, you know, are am my people okay? You know, they're sitting at home, there's that isolation, they're not part of this team environment. So that coupled with now crank this thing up tenfold and they don't have anybody to confide in or, you know, lean on at the office, what is going on in their world. So we talked about something and I think a lot of your listeners and most business people at one point in their time read the book Good to Great. And inside of that book, which is a great business book by, you know, Mr. Collins, there was something in there that he talked about called the Stockdale Paradox. And the Stockdale Paradox is named after Admiral Stockdale, who was shot down in, in Vietnam and was held in a Vietnam prison camp for eight years and abused over and over again, had no reason to believe that he was ever gonna get out of it. He was there with other prisoners of war and he came out and, and really was able to share that story of how he survived. And it was really about that mental toughness, you know, what are you doing in your mind during the tough times? But part of that, what he pointed out, and I'm a very positive and optimistic person, you know, that

Vance Crowe [00:15:00] Two and X three,

Travis Liebig [00:15:02] But, but what, but what he talked about in there was when he was asked who didn't farewell, who didn't make it out of the prison camps, his comment was the optimist, the os optimist went first and failed first. They didn't make it, they died of a broken heart because what they were doing was being very optimistic and you know, they would be in the camp and they would say, all right, we're gonna be outta here by Christmas. And then Christmas would roll around and then, okay, we're gonna be outta here by Easter. And then Easter would roll around then it was, we're gonna be out by Thanksgiving. Thanksgiving rolls around. And that process continued and continued and that never came. What they failed to do was face and confront the reality of the situation. So Stockdale was the guy that just basically said, Hey look, you gotta have that positive attitude, but what you can't do is lose sight of reality. And you gotta, as soon as you can face those worst problems that are in front of you right now, now, so don't lose the faith to prevail, but discipline to confront the most brutal facts of your current reality, whatever they might be. And that sounds drab, but I think from the standpoint of what happened with the optimist they can failed to for, to confront the reality of the situation and kind of took the ostrich approach, put the head in the sand, this will pass and we'll all be fine. But that's not, that self delusion is not how you're gonna get out of this and it's definitely not gonna make it easier. It might make it easier in the short term, long term. It is where I think the rubber meets the road.

Travis Liebig [00:16:32] So the balance of both of those items,

Vance Crowe [00:16:35] I was just talking with my wife this morning about how we really had a good balance going. I I took this to the extreme of like, Hey, we need to get prepared, go, go, go. And she is just like, we are gonna face whatever comes every single day. Today's a new day, new information, we're gonna, we're just gonna deal with that. And you need to have both of those. But I think you're probably right, the optimists here that are too optimistic, that are looking for every single sign of hope, then when they get it, grab onto it and it doesn't work out, you, you start having problems. And I think maybe the other side of it is, if you are preparing for the absolute worst and you're getting yourself ready for it, you don't want to be in the position where you're hoping things burn down, right? You fill up the freezer, you get a bunch of supplies, you're prepared, then you don't want to be like, I am hoping that everything burns down so that I was right. That's a, that's a bad situation to be in too, but I really appreciate your stockdale,

Travis Liebig [00:17:30] FedEx.

Vance Crowe [00:17:30] Yeah,

Travis Liebig [00:17:30] Yeah. And I, and I think on the Stockdale thing, just to kind of wrap that up, that, you know, Stockdale knew he was in hell, right? So he knew he was in hell and he knew that that wasn't going to change, but he knew that he would prevail. And then later he was asked about that whole experience and he said it was the greatest moment of his life.

Vance Crowe [00:17:46] Wow.

Travis Liebig [00:17:46] And that it changed the trajectory of his life, life and who he was and he wouldn't have traded it for the world. So when we were talking to the team yesterday, it was just call a spade a spade. We know this is a tough situation, but we're a community bank and we always say that we're here to help the business owners and the community that need us. Well here's your chance because they need you now more than ever. And you know, it will be painful and it may feel like hell, but when we come through this, we're going to have helped so many businesses when they needed us more than ever that it will forever change the trajectory of this bank because we were the ones that stepped up and got it done versus the ones that said, it's too much work. We're not gonna do it. Or made excuses on why it's not possible. We put people in places to make sure that this was possible. It won't be a well-oiled machine, it's getting smoother and faster every single day. But I have no concerns that we're, you know, not going to be able to serve the businesses that have asked us to serve. And you know, we probably have 10 times the number of businesses that we would normally help with a loan over the course of the year that we're gonna help 'em in, in a month, within a month. So we are, we're funding loans today. We've approved, I dunno if it's close to $20 million of these transactions already. Wow. And you know, our goal is to, you know, every single day, do more than that every single day, keep getting better and faster and then, you know, you don't just stop there. You keep finding ways to, to get faster and better along the way.

Vance Crowe [00:19:17] Well, I know you got a lot going on this morning. I I just had one, one other question I wanted to you to ask about and then my standard question. So the one question is, what are you, when you finally get a break, you finally get a couple of moments to yourself, you flip open Twitter or some other kind of news. What is it that you're looking for? What are you seeing that you think is interesting and probably worth getting other people to pay attention to as well?

Travis Liebig [00:19:42] Yeah, I think I'm trying to pay attention to people that I would say have valuable information to share and you know, that I've kind of filtered them out over a long period of time to make sure that when I'm listening to what they're saying or that they have, you know, gotten my attention that it's worth spending the attention on. So something that I, I came across last night, you know, one an individual that out that is out there that I think has one of the greatest minds, at least at thinking about business problems and articulating, you know, value of business into different ways is our friend Jack Butcher, you know, and his handle visualize value that's out there. But something that he had put out last night, which was visualizing that quote was one from Nas Nasim Taleb and it was bureaucracy is a construction by which a person is conveniently separated from the consequences of his or her actions. So thinking about what bureaucracy is, it's you make a decision, but you know the consequences of your actions, they don't affect you. They're affecting other people down the chain. And that I think is probably a pretty good way to think about what's taking place right now. And it maybe doesn't even mean that it's bad, it just means that it is that decisions are being made from the top of the mountain related to this CARES act and the S-B-A-P-P-P loans. And they probably mean well when they're making those decisions. But every time that you change one of those rules of the game or a form or an applicability or the affiliation rules, the people that are paying for that are way down the chain.

Travis Liebig [00:21:21] And that's the business owner that was counting on you and the individual that is helping make the loan the banker is the one that's stuck in this spot of Yeah, I told you that. And I'm sorry but the game has changed. So that's just a, so that's one area, you know, and again, I'm trying to keep up with people that I respect and admire in the banking community, in the banking space that that lead by example. And somebody that, you know, I think you and I have shared about before is a gentleman that leads connect one bank out in New Jersey and New York and you know, they've got the community bank approach and they're a multi-billion dollar bank today, but you know, leading by example doing what's right. And I think it comes down to the mindset that we're trying to get our people in and making sure that, you know, they are aware of the situations that they've got the support and they've got the resources and that's what we're, we're wanting to give our business customers and non-customers that you've got the support, we've got the knowledge, the process is, you know, figured out and it's had some changes along the way, but you're gonna get those dollars that you need and we wanna make sure that we get 'em to you as fast as we possibly can. So I feel good about our process and I feel really good about where it's headed.

Vance Crowe [00:22:33] And can people contact you, so you guys have a good process, you're deeply in involved in St. Louis. If somebody's in Oklahoma or Texas or Washington, can they, can they call up St. Louis Bank or can they contact you as well or, or do you have other advice for them?

Travis Liebig [00:22:49] Yeah, I would say that, you know, this is a national program, national lending program. The way that they may be able to get even better results in this would be talk to one of their local banks in their community if they can get to somebody that is in that community. Because the businesses that are in those communities and or current customers, there's a lot of BSA rules, bank Secrecy Act rules. You don't have to duplicate and bankers have their antennas up for fraud in these things. However, a warm pathway through somebody that is connected, one of our board of directors, we're doing some loans far outside of the state would be the same for you. You have a pretty good following of individuals that are running companies and if they had some questions, we'll try to answer those for them. So definitely I'd encourage them to do that. And on our website there is a, there is an email address out there that if you have questions about your application, email it and I would just say go out there and have them email it because I've got them forwarding me those questions as we go. So they'll filter out all of our questions. Anything related to the PPP program I want coming to me so that I can make sure that we get the experts answering those questions as quick as possible. It's not best.

Vance Crowe [00:24:00] And the website for St. Louis bank,

Travis Liebig [00:24:02] St. lewis bank.com, so S-T-L-O-U-I-S-B-A-N k.com, click on the red banner at the top and then you'll be able to see some of the relief programs where you could apply through us if you wanted to. But then down at the bottom, there's that for questions, email and email 'em. Even if you're gonna do your loan anywhere else, I am more than happy to try to find you the answers as fast as I possibly can because a lot of the same questions keep coming up and we've already answered it a lot of times that we should be able to get a pretty quick answer for 'em if they can't get to that local banker. And I think people are begging for a bank that with speed, but a bank that I can talk to a human being and that's tough to find out there. And there's some banks that have, and that's what we've been building and I think that if we can help provide some value for them to continue to work with their existing application, we're gonna do that for 'em.

Vance Crowe [00:24:51] Well brother, I am gonna let you go. I know you have a lot going on. I, I've been asking people what do you think the world looks like in two weeks? Do you want to take a swing at it or do you want to call it and we'll we'll just meet next week?

Travis Liebig [00:25:03] Well I would say that there will be some probably changes to make sure that the dollars got put into hands as fast as possible. We have continued to get what I'll call lessening a lessening of the underwriting rule and or documentation rules that are out here. Banks are getting some helm held harmless provisions out there. And really what this is coming down to is this is a straight up grant. If you use it for the purposes of intended, don't overanalyze it because if the customer says that this information is correct, take that information and gift them their loan. So that's really what we're gonna continue to see is that this may have gotten faster to be able to underwrite and approve and the backlog will probably still be there within, you know, how many loans can you get printed off loan documents every single day. But there will continue to be more relief on this. And again, I hope that I'm right when I say that the government, the SBA will not let business owners down. And even if every single business owner got their loan through this program and there was enough dollars, I don't think it's gonna be enough. There may need to be another round that comes out there because again, we didn't, you know, have a economic slowdown here. We basically just one day said, let's shut this economy off. Doesn't mean that there was underlying conditions that were bad, it just means we have to shut this off for the safety of our people. Whatever we can do to make sure that when we say okay, turn it back on, they pick up the ground right where they were. But that takes dollars to keep people employed and I think the SBA will make that right. So we're here to help and it will be a little bit difficult along the way, but I do think people should not panic that if they haven't heard anything back from their bank yet, that we just started officially Friday taking the apps and yesterday was the first day we could really approve those via our Eran system and get dollars out the door.

Travis Liebig [00:26:50] There is time more updates will come and there I think there will be a lessening of the rules. So right now, you know, the sky is not falling yet, but try to find somebody to get you the straight answer and if we can help be that person, we're gonna do it.

Vance Crowe [00:27:02] Well brother, I am really glad I'm, I'm, I'm, it's weird to say, but proud of, of watching my friend navigate in this crazy situation. I, I'm glad we got a morning workout in this morning before we hit the, hit the Skype. I hope we keep doing that. Maybe we'll have you back on next Tuesday or so to hear how things are going.

Travis Liebig [00:27:20] Absolutely. Thank you very much Vance. And be safe out there. And again, for the business owners, I think we're gonna be able to make sure that they get what they need and the time that they need it. So stay tuned. Thanks

Vance Crowe [00:27:30] Man. Travis and the big St. Louis Bank.