Small Business Resiliency in South Florida
With South Florida Region Executive Israel Velasco
The impact of COVID-19 has dramatically affected our small business community. Key industries, including hospitality and tourism, that were driving positive projections for 2020 are now those most deeply impacted. Nonessential businesses were forced to close their doors and unemployment in South Florida has outpaced much of the United States. Just a few short months of disruption have altered our area’s growth trajectory and economic outlook, causing concern among our residents and business and community leaders.
Despite this challenging reality, Popular Bank is seeing overwhelming optimism and resiliency among our small business clients. As restrictions ease throughout South Florida, businesses are reopening their doors with enthusiasm, while others prepare to follow suit.
As we continue to transition to the next phases of recovery, key trends, projections and indicators for our area’s future have begun to emerge.
Diverse Small Business Lending Activity Will Remain Robust for the Rest of 2020.
We are seeing an early, but significant, uptick in small business and economic momentum throughout the area. Low interest rates and ongoing housing demands will encourage commercial real estate (CRE) lending for the rest of the year. As CRE lending persists, we are also finding our small business clients consistently pursue multifamily and owner-occupied financing.
This activity signals promise for South Florida. With that said, we anticipate a growing demand for diverse small business solutions to match our clients’ needs.
Already, we see nonessential businesses navigating the expenses of reopening, along with a long-term outlook of reduced revenue. This complicated pairing will continue to drive demand for working capital, lines of credit and Small Business Administration (SBA) loans. Simultaneously, essential services, including grocery stores, have seen a spike in their normal business operations and revenue. These businesses will be more inclined to continue to seek depository services.
Economic Recovery and Recalibration.
As we see businesses reopen and adjust to their unique realities, South Florida is on track for an increase in commercial activity this summer. However, it is important to distinguish that this is not a return to “normal”. Instead, we are adapting to a new and temporary reality. Key industries within the area including hospitality, tourism, and import/export will struggle to regain momentum until the uncertainty around the COVID-19 health crisis is resolved.
According to a 2018 study conducted by the Small Business Department Center at Florida International University, 82,000 small businesses employ 53.3 percent of Miami-Dade County’s workforce, well above the national reported figure of 47.5 percent. This data suggests that South Florida’s reliance on our small business community may pose new challenges during these times. Small and medium-sized businesses will struggle to stay solvent for longer periods of time if recovery moves at slower rates, threatening long-term implications for our local economy and communities.
Navigating Through Challenges and Volatility.
These realities mean that now more than ever before, we at Popular Bank believe in the power of working closely with our small business clients to understand pressing challenges, growing pains, and opportunities. When navigating volatility and complicated challenges, this critical and fine-tuned relationship will be important for continued success.
During this time, we believe it is important for small businesses to look to their financial institutions as strategic partners. We encourage them to explore financial solutions, leverage digital tools, and seek our diverse products and services.
Similarly, we believe financial institutions have a responsibility to their small business clients. We must understand their needs, operate with speed and agility, and provide comprehensive services. We are successfully meeting these needs through integrated and collaborative processes, expediting loan approvals and identifying effective solutions. Through these practices we have effectively approved and processed 28.5% more commercial loans year-to-date, despite the challenges faced by our small business communities in 2020.
We implement these practices diligently. In building this dynamic into each of our small business relationships, Popular Bank has found significant success in helping clients enterprise for new and meaningful opportunities.