Already battered by months of the coronavirus pandemic, Main Streets across the country are staring down the barrel of a grim winter. But the banks that serve those small businesses have endured — if not thrived — as COVID-19 took over the country.
That good fortune could change in 2021 as regulatory relief for community banks comes to an end and aid to small businesses runs out, sparking potential defaults in the small business space.
Large banks throughout the pandemic have reported being well-capitalized enough to withstand the economic shock, and community banks, somewhat surprisingly, are outperforming their larger counterparts in several key areas. One of the most important is the Paycheck Protection Program, which has kept many community bank customers afloat during the months they’ve been forced to shutter their business or operate on an extremely limited basis.