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St. Pete’s First Home Bank focuses on minority lending, PPP update

Margie Manning



First Home Bank roundtable participants (from left): C.J. Castro, Cynthia Johnson, Eileen Rodriguez

First Home Bank has launched a new lending program, focused on making credit available to both minority- and women-owned businesses.

The program has an “aggressive goal” of distributing more than $50 million in loan funds locally in the next two years, a news release said.

The $1.5 billion asset St. Petersburg-based bank, a subsidiary of First Home Bancorp (OTCQX: FHBI), wants to become the preeminent minority business lender in the region through its new Minority Owned Business Lending Program.

“This is the right thing to do for both the community and our shareholders,” Anthony Leo, First Home CEO, said in the news release.

The bank launched the new program at an internal event for its employees. During a roundtable discussion, three leaders in the minority business community talked about the challenges facing minority-owned small businesses and prospective lenders, including language and cultural barriers, lack of trust in financial institutions, bureaucracy and paperwork, financial literacy and the disproportionate impact of Covid-19.

“When small business wins, we all win,” C.J. Castro, senor area manager for the U.S. Small Business Association, said at the roundtable. He said First Home Bank was the first bank he was aware of to start a minority lending program.

“The seeds you are planting will bear future fruit in the garden of economic opportunity,” said Cynthia Johnson, director of the Pinellas County Economic Development’s Office of Small Business & Supplier Diversity.

She also urged event participants to “do their homework” to understand the issues that minority small business owners face and fully understand all the financial tools that are available. Across almost all questions, she preached “authenticity,” encouraging First Home Bank employees to first become part of tightly knit minority communities before trying to lend to their members.

“Don’t assume minority business owners are unsophisticated; you will find they are all different in terms of financial and management experience,” Eileen Rodriguez, regional director of USF Florida Small Business Development Corporation said at the roundtable. She echoed Johnson and Castro in urging bankers to develop trust, and encouraged the bankers to network through minority business organizations.

PPP changes

Among those taking a lead role in the bank’s minority lending initiative will be Tom Zernick, who is president of CreditBench, First Home Bank’s Small Business Administration Lending division.

Tom Zernick, president of First Home Bank’s SBA lending division

Through CreditBench, First Home was one of the larger Paycheck Protection Program lenders in the United States. First Home bank supported 8,947 businesses nationally, funding $876 million in PPP loans and  directly impacting 105,000 jobs.

In early April, the bank made a management decision to temporarily suspend regular 7(a) SBA lending and dedicated its 60 CreditBench team members to the rollout of PPP, Zernick said last week at a hearing of the Senate Committee on Small business and Entrepreneurship.

But Zernick said the bank might not be able to participate in any future PPP initiatives without changes to the program.

Lenders have not received clear guidance from the Treasury and the SBA on their role in the PPP forgiveness process. That’s causing delays for borrowers in obtaining loan forgiveness, he said.

Among other suggestions, he said lenders need more simplified forgiveness application requirements and should be held harmless on the calculation of the forgiveness amount.

Zernick also called on Congress to look at long-term recovery measures beyond PPP, including enhancing and stabilizing SBA’s flagship 7(a) program.

“During the Great Recession from 2009 to 2011, I experienced firsthand the benefits of lending and managing SBA loan production under an increased 90 percent SBA guarantee coupled with program fee waivers for lenders and borrowers,” Zernick said. “These provisions and others allowed my bank and those of my peers to facilitate access to capital for borrowers that was not available through conventional means to the small business community, and undoubtedly increased the ability for our institution to reach even more borrowers than we would have been able to without these program enhancements during those difficult economic times. The uncertainty we are facing with this pandemic goes far beyond the capital crisis faced during the 2009 recession.”

He also supported extending small business debt relief payments created by the CARES Act. A provision of that measure provided six months of payments for all existing and new borrowers in traditional SBA loan programs. Those borrowers were in many cases different from PPP borrowers.

“Now that the majority of the six months of Section 1112 payments are coming to a close for our borrowers, my bank is starting to become inundated with deferral requests from SBA borrowers who simply cannot make their payments given that the economic conditions for most of these borrowers remain unchanged since March. The inability to make loan payments and meet other operational expenses will force many small businesses across the country to close their doors permanently,” Zernick said.

The Senate committee is chaired by Sen. Marco Rubio, R-Florida, who is supporting a second PPP stimulus package.

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