.Santa Cruz County Bank Rushes to Protect Local Wages

Creedence Shaw could use a day off. When the county’s shelter-in-place rules took effect in mid-March, Shaw’s working hours went from a normal day shift to a nonstop grind. He now works around the clock, organizing his team’s processing of small business loans—up to 600 per day, he says. 

As is the case for hundreds of community bankers across the country, every day for Shaw in the era of the COVID-19 pandemic is a daily sprint to secure millions of dollars in federal stimulus funds for local businesses. As of last week, Santa Cruz County Bank—where Shaw serves as chief credit officer—had safeguarded payroll for 29,218 jobs in Santa Cruz County through the Paycheck Protection Program (PPP).

“They weren’t going to allocate any for us,” Shaw says. “It was up to us to go and grab it.” 

Shaw fielded calls from clients for weeks about their losses stemming from the shelter-in-place order. The county’s order required that non-essential businesses close starting March 17 in response to the spreading novel coronavirus. Shaw first heard about the PPP in the news and knew it was the remedy businesses needed: forgivable loans with almost no interest to keep employees on payroll. 

But the federal money doesn’t just appear in the bank accounts of companies. The program distributes loans on a first-come, first-served basis, and community banks must create their own programs for processing. “It’s a race,” Shaw says. “We knew we needed to reach out, but we also knew that the money was going to run out quickly.” 

Congress and President Donald Trump approved a second round of funding, which went live Monday, but the Small Business Administration website started repeatedly crashing from the outset, causing businesses around the country to panic.


Several days after reading about the PPP in the news, Santa Cruz County Bank finally received the formal announcement from the Small Business Administration (SBA) about the program. They had already jumped into action and were receiving pre-applications from customers like Lúpulo Craft Beer House and Spokesman Bicycles. 

Local business leaders in Santa Cruz developed a rapid response to implement the recent federal stimulus for small local businesses, which employ nearly half of the country’s workforce.

In the first wave of federal funding for small businesses in March, Congress passed $349 billion dollars for the PPP to loan to small businesses. The loans are designed to keep employers from furloughing or laying off workers with the requirement that businesses use 75% of the funds for payroll costs. 

Working with the federal government can create a sense of whiplash. Shaw first projected that Santa Cruz County Bank would have four weeks to secure the cash for local businesses. Then that timeline changed to two days.

“There’s constantly shifting guidance,” Shaw says. “You can do this one day, and then the next day they want you to do it another way. That made it hard.”

Santa Cruz County Bank processed 1,600 loans in the first slice of federal funding in April, just days before the program was depleted. The community bank far surpassed the national average of 222 loans processed per bank, which includes larger banks like Wells Fargo. According to Santa Cruz County Bank, its average loan made through the PPP is $147,000. 

“Everyone was so worked after that,” Shaw says. “It was a whole bank of zombies.” 

Bay Plumbing Supply and Showroom succeeded in qualifying for a loan in the first round of the PPP through Santa Cruz County Bank. Mahina Marx, the store’s general manager, says she first heard about the program through her favorite news program, PBS NewsHour. Marx emailed her account manager at Santa Cruz County Bank asking about the program on a Friday and began the application process the following Monday.

“It’s like a competition,” Marx says. “You have to get your stuff in as quickly as possible.”

After the bank qualified Bay Plumbing and Showroom’s application, Marx says she was able to keep all but two of her 18 employees on payroll, enough to keep the business’ doors open as an essential business for sanitation.


Some small businesses that applied for PPP loans through bigger banks were waitlisted and have not received federal support.

Scott Zankman is the co-owner of Variance Jewelry, a local jewelry company that creates handmade pieces with precious stones. The company has four employees, not including himself and his co-owner.

Zankman applied for a PPP loan through Wells Fargo on the first day he received the application, and was immediately waitlisted.  

“In their email, it said, ‘You should consider applying with other lenders,’” Zankman says. “It was a spam email that was written to everybody. There was nothing personal about it.” 

Variance Jewelry has managed to give some of its employees part-time hours, says Zankman, who is now seeking financial aid outside Wells Fargo. The company leans on its online sales to get through the crisis. 

At Santa Cruz County Bank, roughly 500 loans are in the queue for the next round of processing, Shaw says. He says they will open up applications for new businesses to apply this week. 

“We are fiercely Santa Cruz. We are intertwined in the community in a lot of different ways,” Shaw says. “It’s hard to say no or turn them away when you know it’s someone you will see on the street.” 

According to the State of California Employment Development Department, the unemployment rate for Santa Cruz County in March was 7.9%, up from 6.4% in February. Labor market consultant Andriy Moskalyk says the unemployment rate won’t reflect the effects of the coronavirus until May or June, since numbers in February and March predate the many coronavirus-related business and school closures.  


Shaw is confident that, with the help of 22 new bankers and three new robots, the 500 loan applications that weren’t processed at Santa Cruz County Bank in the first round will be funded in the second. The robots, or “bots,” are computer programs that automate the loan application process.“They don’t like me calling them robots,” Shaw jokes.

After the first wave of funding for PPP ran dry on April 16, Congress approved $310 billion dollars to replenish the program. 

Shaw says Santa Cruz’s proximity to Silicon Valley makes processing possible for thousands more federal loans. In just one week, the organization went from doing no online loans to having all its business online by partnering with highly responsive web developers in the Bay Area, who created and implemented an online application overnight. 

“They get the startup culture,” Shaw says. “Other teams were like, ‘We can have something for you in two weeks.’ I was like, ‘Two weeks? This is going to be over.’”

At Santa Cruz County Bank, bankers decide which applications are eligible, and they then feed that data to the bots. The hours saved by automating the process can put millions more dollars in the hands of Santa Cruz businesses. 

“With the bots, we can start [the applications] right when the window opens and get through them faster than we could before,” Shaw says. “The application is super short; it’s the most streamlined loan I’ve ever seen. I definitely encourage people to apply. There’s no reason not to.” 

Shaw, who served as a banker in the 2008 crisis, believes Santa Cruz is better off than it was in the last economic downturn. 

“The difference is hope,” Shaw says. “Before in that one, there wasn’t any hope. There wasn’t a way I could see through it. It was not fun and very difficult for everyone involved. Here, I feel like there’s hope … I can see a way forward for a lot of businesses.”


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