In the first wave of the Small Business Administration’s Paycheck Protection Program, West Des Moines, Iowa-based Bank Iowa Corp. closed around 400 loans totaling $72 million, according to CEO Jim Plagge. When we spoke — just a few days before the SBA re-opened the portal for another $320 billion of PPP loans — the $1.4 billion bank was prepared to submit another 75 or so applications.

The bank’s branch teams — which are split to encourage social distancing and minimize the impact if someone were to get sick — have also taken to ordering takeout every day to support local restaurants that have been particularly hard hit. “[We’re] just trying to support them,” he says.

This desire to support the 23 communities it serves inspired Bank Iowa’s “Helping Hand” program, which is accepting nominations to assist local organizations, small businesses and nonprofits. The bank’s goal is to serve at least one need in each of its seven regions. “We’re only as strong as the communities we serve,” says Plagge. “So, we’re just trying to help where we possibly can.”

Banks play a vital role in supporting their communities, one we’re seeing played out across the country as bankers put in extra hours to help customers, especially small businesses that keep towns alive. Bank Iowa, like many financial institutions, recognizes that supporting small businesses can’t be limited to the SBA program — PPP loans have proved difficult to obtain, and they don’t make sense for some companies that still need help.

Bank Iowa reached out immediately to borrowers to understand the impact of the coronavirus crisis for each one, says Plagge. The bank has deferred loan payments, restructured debt and set up working capital lines. Bankers have also been a shoulder to cry on.

“[We’re] trying to be there to help our clients talk through the difficulties they’re facing,” says Plagge. “Hopefully we can offer some advice and encourage them along the way.”

Relationships matter. “We typically see that business banking account managers get good scores for being courteous, knowledgeable and responsive,” says Paul McAdam, a senior director, regional banking in the financial services practice at J.D. Power. Small business owners will be even more sensitive to their banker’s response in today’s desperate environment, asking: “‘Do I feel like I’m connecting with them? Do they understand my needs and what I’m going through right now?’”

In addition to building long-term relationships, supporting small businesses now could help banks reduce later damage to their loan portfolios. But unfortunately, tough decisions will be required in the coming months. Plagge says Bank Iowa has started stress testing various sectors. With agriculture comprising a significant portion of the loan portfolio, they’re examining the impact of a reduction in revenue for ag producers.

“Our goal will be to try to work with every borrower and see them through this,” Plagge says. “But we also know that may not be possible in every case.”

David K. Smith, a senior originations consultant at FICO, advises banks to segment their portfolio, so lenders understand which businesses they can help, and which pose too great a risk. Does the business have a future in a post-Covid economy? “You can only help so many without sinking your portfolio,” he says.

But banks should also look for ways to keep relationships alive. “As small businesses go out of business, there’s an entrepreneur there … that person who lost this company is going to be on the market creating another company soon,” says Smith.

After the crisis, this could lead to a wave of start-up businesses — which banks have typically hesitated to support. “They’re going to have to rethink policy, because [of] the sheer number of these that are going to pop up,” says Smith. Some businesses won’t fail due to poor leadership; they simply couldn’t do business in an abnormal environment, given shelter-in-place and similar orders issued by local governments. “Bankers will have to appreciate that to a certain degree and figure out a solution, because it will help bring the economy back faster,” he says.