LANSING–Michigan’s credit unions had helped to process more than $750 million in Paycheck Protection Program loans for approximately 7,500 small businesses representing 150,000 employees before that program ran out of money, according to the Michigan CU League.
Approximately 50 credit unions have been participating in the PPP, which requires an institution be an SBA-certified lender.
The data and comments from credit unions compiled by the league took place prior to an announcement by the SBA that it was out of funds. The league noted at that time many CU execs were expressing worries over just such a funding shortage taking place.
In addition, credit unions across the state have been providing other financial assistance, guidance, relief options and more to members during the coronavirus pandemic, the league said.
‘Stretched to the Limits’
“While capital available for new loans has been stretched to the limits due to the unprecedented borrowing needs, most credit unions have seen borrowing capacity helped by a large influx of deposit funds as consumers and some small businesses have seen federally insured credit unions as a safe haven during turbulent market conditions,” the league said.
Michigan CUs participating in the PPP have primarily made loans of approximately $100,000, reflecting the smaller businesses served by credit unions, the MCUL said.
“Michigan’s credit unions have been truly inspiring during this fast-paced and unprepared PPP rollout by the SBA,” said Michigan Credit Union League President/CEO Dave Adams. “Despite the lack of clear guidance and overall readiness by the SBA, credit unions have worked quickly and proactively to process applications and to prepare for loan funding. Due to capacity restraints and concerns about fraud exposure, most credit unions and banks have focused on existing client relationships and needs. But some are stretching to serve new small business borrower needs as well.”
What Credit Unions are Reporting
According to the MCUL, here is what credit unions participating in the program have experienced, along with what they are saying:
Team One Credit Union in Saginaw had 60 loans in the pipeline.
Frankenmuth Credit Union said it had processed four internal loans for local businesses in the amount of $10,000. CEO Vickie Schmitzer said the CU is talking to businesses every day and owners’ number-one question is, “How will we ever make it?”
Frankenmuth Credit Union also services many tourist-based businesses, and Schmitzer told the MCUL these owners are concerned with the coronavirus’ lasting impact on tourism, “There are a lot of unknowns right now and this causes fear.” Schmitzer added the small businesses are “our friends and neighbors. They support local sports teams, schools and non-profit organizations to improve all our lives. They employ our family members and encourage others in our communities to be creative and find solutions not yet met with their entrepreneurial spirit. If credit unions don’t support the small entrepreneur, who will?”
United Federal Credit Union in St. Joseph told the MCUL it has also been in daily contact with business owners, providing as much clarity and information as they can regarding SBA’s PPP loans and Economic Injury Disaster Loans (EIDL).
“These are the times when credit unions should be shining and stepping up to help members and the community,” said United FCU VP of Commercial Lending Tony Mandarino. “As credit unions, we should be an educational professional that they can count on to point them towards the best resources for their specific situation. At United, we have very strong relationships with our members and they’re looking to us to be that partner in their toughest times.”
Astera Credit Union said it has assisted several of its business account holders with the PPP application process. In their first week, 22 of the applications on which they assisted were approved by the SBA. “Our local economy is taking a hard hit right now,” said CEO Martin Carter.
Honor Credit Union said it has noticed a change in member business owners’ requests since the beginning of the pandemic. What started as requests to help get through the short-term has changed to help construct a re-opening plan, and how to weather growing concern about what that will look like, according to the league.
“We got very creative very quickly on ways to provide safety nets for our businesses before any government programs were available,” said CEO Scott McFarland. “The possibility for debt forgiveness and a low interest rate on the remaining portion of the [PPP] loan not used for payroll is critical to support these local businesses as they try to keep people employed.”
At the time it spoke to the league, Honor has reported 237 submitted PPP applications, with a total of 401 in the pipeline, totaling $18.7million in assistance.
McFarland said PPP loans have provided some sense of peace even among the early program changes and other unknowns in its rollout, but he worries about permanent damage done to businesses if the stay-in-place order continues into May.
“These are difficult times, but we are fighting through them together,” McFarland said. “As a member-owned cooperative, we never want to take for granted what small businesses do for us and our communities. It is essential to support them because they support us.”
Isabella Community Credit Union said it has been working to help small businesses access and navigate the many relief options available, including the Michigan Small Business Relief Program grants and loans, the EIDL program and, most prevalently, the PPP loan application process.
ICCU has collaborated with another credit union that is an experienced SBA-lending credit union (and its CUSO) to get the loans in the pipeline.
ICCU President/CEO Jenny Hoyle said small business owners have communicated their concerns about how long it will take to return to business as usual, even after the executive orders are lifted.
“A few feel they have enough reserves to weather the storm; however, for many, they are concerned about their ability to remain in business with this loss of momentum and revenue,” continued Hoyle. “They are worried about their employees who are currently out of work, how quickly they will be able to put them back to work and whether their employees will return to work for them when that time comes. Related to that concern, they are worried that the SBA PPP loan funding will be exhausted before their business receives funding.”