Ross Magnuson: Paycheck Protection Program from a banker’s perspective

Summary: The Paycheck Protection Program has been a bright spot during these troubling times. Many businesses have been able to keep their doors open and provide employees a paycheck for their families.

magnuson.ross photo.jpg
Ross Magnuson, Heritage Bank Submitted photo

The Coronavirus Aid, Relief, and Economic Security Act, also known as the CARES Act, was passed to offset the economic fallout of the COVID-19pandemic in the United States. It was signed into law by President Donald Trump on March 27.

The Paycheck Protection Program is one component of the CARES Act designed to get money directly into the hands of small businesses and non-profits so they can continue to employ their people through these challenging times. The philosophy of the program is that our economy has been hampered by COVID-19, but as long as people have a job, the recovery will happen much quicker. These PPP loans will be forgiven when certain criteria are met— the main requirement being that at least 75% of the money is used for payroll.

Administering this program was assigned to the Small Business Administration. Initial communication from the SBA indicated that guidance for banks would be available in about three weeks. Government leaders insisted they would be out by the end of the first week. Three days later, the guidance was published and on Friday, April 3, banks across the country were taking applications from anxious business owners and non-profit leaders hurting from the pandemic.

Needless to say, this uncertainty led to confusion and frustration for businesses, banks and the SBA personnel administering the program. One SBA official described the process as, “we’re building the airplane as we’re flying it.”


The PPP got off to a slow start. The first day fell flat of expectations as there were issues with the SBA’s technology, applicants’uncertainty on eligibility and banks that did not have time to prepare for the demand. Heritage Bank and much of the banking industry put in long hours that weekend to ramp up their operations. Monday morning, A PPP process was in place for handling the deluge of applications.

Over the next ten days the demand for this COVID-relief assistance from small business owners was overwhelming. $349 billion was allocated to this program. By Thursday, April 16, the money was gone. Over 1.6 million small businesses and non-profits were provided loans from this program; however, millions more were left out.

Those ten days were exhausting for banks. Developing processes to accommodate the requests, moving team members from their daily tasks to assist with this program and monitoring the continual changes coming from the SBA made for many long days and sleepless nights.

Those ten days were also the most rewarding ten days in my banking career. Our team helped 355 small businesses, sole-proprietors and non-profits who received nearly $49 million in aid through this program. I estimate that just under 40,000 paychecks that may have gone unpaid without this assistance would now be made.

Despite the long hours and lack of clarity surrounding the program, I saw smiles and energy everywhere I looked within the bank. New leaders emerged and our team came together in a way that managers often dream about. We all knew how important this was for our customers and communities.

The impact of the PPP loans for many of the recipients is life-changing. It was their feedback that kept our spirits up when exhaustion set in.

One customer wrote: “I am literally typing this while crying. A little much? Maybe. But honestly, I have no words to thank you guys for getting this in and for your help.”

Another wrote: “I'd like to thank you and your team again for all of the hard work you've put in to ‘save the day’ for small business owners such as ourselves. Words cannot express our gratitude and the impact you are making on our business and on the folks we employ.”


The government has since issued a second round of PPP funding —adding an additional $310 billion to the program. Most of these businesses are small. The median business has under 10 employees and their loan was just under $60,000.

The PaycheckProtection Program has been a bright spot during these troubling times. Many businesses have been able to keep their doors open and provide employees a paycheck for their families. HeritageBank’s employee-owners have found a real camaraderie by working together to help our customers in need despite the long hours and extra work. There is areal pride in knowing we have helped save jobs and jumpstart our economy.

Dollars are still available during this second round of funding for the Paycheck Protection Program. If you have not already done so, we encourage you to speak with a banker to learn more about the program and how it may help you through this period. HeritageBank is here if you need us. #riseupwithHeritage

Ross Magnuson is market president of Heritage Bank, N.A., of Minnesota, based in Willmar.


What To Read Next
Get Local