The bank awaits guidance from the SBA to begin the next phase of the program, approving loan forgiveness.
Of the 1,110 loans Cogent Bank processed as part of the Paycheck Protection Program, only 20% of its applicants were from existing clients.
Cogent Bank Market President Scott Flanders said the bank encouraged the 80% of applicants who weren’t clients to switch their services to Cogent, and said that so far, an “overwhelming” number are.
“There are not enough hours in the day for us to get accounts open,” he said.
Cogent Bank is based in Orlando, but opened its first Jacksonville office last year at 5011 Gate Parkway. That office serves as the Jacksonville executive and commercial lending team’s headquarters.
Flanders said the bank’s ability to serve a large percentage of nonclients was its “single greatest accomplishment” during the PPP lending period.
Flanders said the bank funded $166 million in loans for about $146,000 on average. PPP lending is slowing down as the program comes to an end June 30, but the bank is still keeping busy.
Kendra Vincenty, Cogent Bank director of SBA lending, said the next challenge for the bank will be similar to the one it faced when the PPP first began.
The first round of lending was “quick and furious,” Vincenty said. Rules for lenders were not clear at the outset, and were changing daily.
The next phase of the program will be a verification process, where businesses must prove they have used the funds correctly so they can be forgiven.
“We are not clear exactly what SBA and the Treasury will expect from the bank with regards to our confirmation of the information the borrower gives to us on the approval of forgiveness,” she said. “We’re still awaiting that guidance.”
Vincenty said she recommends businesses keep any records, receipts or paperwork related to how the PPP funds were used.
“Making sure you have receipts, checks, whatever it may be so you can define the use of PPP so it makes sure forgiveness review is easy, and it makes it clear to anyone looking at it that the PPP dollars were used in the spirit it was intended by the CARES Act,” she said.
The PPP was made available through the federal Coronavirus Aid, Relief and Economic Security Act.
She said the bank advises small business clients to “get in touch with understanding” their business models. That means putting together financial projections for the coming year, planning ways to overcome another impact in the future, and finding ways to change their business model to recover financially from the COVID-19 closures.
“But those projections start guiding a borrower to start thinking about what their business model is today, what it’s going to look like in the future and it helps guide us as lenders (as to) how and when will the stabilization occur, and how long will it take,” she said.