The Business Recovery Loan program instituted last week by HomeTown Bank, Moody National Bank and Texas First Bank has become a source of interest for economic development professionals around the country in the midst of a historically bad time for businesses, said Jeff Sjostrom, executive director of the Galveston Economic Development Partnership.
A similar program after hurricanes Ike and Harvey put money from low-interest loans into the hands of area businesses immediately following those disasters, bridging the gap until federal recovery programs kicked in.
“The banks are extremely busy right now,” Sjostrom said. “We’ve got people all over the country calling to ask about that program.”
Moody National Bank President Vic Pierson said he’d gotten many calls about the program but has found his regular business customers are more interested in the bank’s loan deferral program that allows them to skip payments on an existing loan for up to 90 days.
“They’re hoping that will get them through this period of uncertainty until they can get back up and running,” Pierson said.
HELP TO MAKE IT THROUGH
The Business Recovery Loan program, set up to offer loans through the end of June, is not a solution for everybody, but it helps a significant number of local businesses make it through a critical period of disaster recovery, Sjostrom said.
“We’re not even in the recovery period yet with this one,” he said. “Our area was delivered a trifecta. We saw the COVID-19 pandemic, the financial meltdown of Wall Street and plummeting prices of oil and gas all at once.”
That’s similar to 2008 when Hurricane Ike hit just before the banking and mortgage industry crisis that put the nation into a recession.
Meanwhile, these community banks focus on the immediate needs of their customers, businesses that have relied on their services and need a boost to carry on.
“We’re not talking about just mom-and-pop operations — though a lot of those are in trouble,” Sjostrom said. “We’re talking everything from Mario’s and Gaido’s, businesses with a long history here, to Landry’s Corporation. Nobody is insulated from this event.”
AHEAD OF THE CURVE
Sjostrom served on a disaster recovery panel for the International Economic Development Council earlier this week to talk about lessons learned in recent disasters, such as Hurricane Harvey and to talk about what could be done going forward.
The Business Recovery Loan program came up in that context, and economic development professionals from other parts of the country wanted to hear more, he said.
“Where Galveston and Galveston County are ahead of the curve is disaster preparedness,” Sjostrom said. “We’re susceptible to hurricanes, we’ve done this from the pre-1900s to the present, and it’s something we practice on an annual basis. For many other communities, this is new.
“As bad as it is, it’s hard to recognize something good, but we have some built-in advantages, from the resiliency of the community to our local bankers.”