September 18, 2020
EXCERPT: Credit unions are stepping up to the plate when it comes to issuing PPP loans to small businesses across the US.
Financial institutions across the US have been offering Paycheck Protection Program (PPP) loans to small businesses, but credit unions, in particular, have been strong contributors to the program.
In New York, for instance, credit unions have issued more than 9,250 loans in the PPP, according to data collected from the Small Business Administration (SBA) and NYCUA member institutions by the New York Credit Union Association.
Over 93 percent of the PPP loans from credit unions in the Empire State were made for under $150,000. The focus on these loans made by credit unions appears to be mainly to small businesses, and thanks to their efforts, credit unions in New York have helped save over 60,000 jobs.
The Paycheck Protection Program (PPP) is the primary stimulus program for small businesses under the CARES Act that has been funded by the Small Business Administration (SBA). The program was created with the intention of providing loans to faltering businesses by covering the cost of operations - including payroll - for eight weeks.
The COVID-19 pandemic has been a thorn in the side of small businesses across the nation that have struggled to stay afloat and pay their employees. With the PPP in place, businesses can at least cover their payroll for a couple of months to avoid shutting their doors for good while helping their staff pay their own bills.
Credit Unions Working Diligently to Offer PPP Loans Despite Shortcomings From the Pandemic
The slew of PPP loans originated by credit unions were made despite the reduction in in-branch operations and an increase in remote-working staff as a result of the health crisis. These efforts have helped credit unions ensure that products and services continue seamlessly to members and are a big reason why many New York businesses have been able to stay open and continue paying their employees.
Credit unions have a history of serving small businesses, and perhaps their relationships with these clients have strengthened business services, specifically loans and deposit accounts. Community banks were the first financial institutions to start processing loan applications for the PPP, and many have managed to snag new clients as a result of their offerings.
There has been plenty of demand for the PPP from small businesses across the US. As such, the government extended the deadline for the program to August 8 after the originally scheduled end date of June 30. While this deadline has already expired, a new stimulus package is in the works that may re-open the PPP program.
Smaller Banks Also Shining in the Main Street Lending Program
At the same time, community banks are outshining big banks with Main Street Lending Program (MSLP) loans being made to small businesses to help minimize losses stemming from the coronavirus crisis. All lenders participating in the MSLP are smaller community banks, with the biggest holding no more than $16 billion in assets.
Smaller banks and credit unions are stepping up to the plate when it comes to helping small businesses throughout the pandemic. While big banks are largely sticking to just their own clients, credit unions are making a valiant effort to help out smaller businesses and are beefing up their client base at the same time.
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