The availability of funding for small businesses is essential to keeping local economies afloat. In a 2019 Forbes article, writer Nish Acharya notes: Across America, cities, states, and regions have spent the last decade transforming their economic development strategies to emphasize local entrepreneurship, university partnerships, and local small business support.
That kind of activity extends to credit unions, too.
We have been providing small business loans to the community for more than 20 years, says Dan Smithson, CEO of Star USA Federal Credit Union ($158.7M, Charleston, WV). We know firsthand the role these businesses play in our local economy.
Indeed, small businesses play a critical role in local economies. Unfortunately, the coronavirus pandemic has forced businesses to close for health and safety concerns, throwing into flux the future of companies, jobs, livelihoods, and communities.
Small businesses, specifically Main Street businesses that are often overlooked by larger financial institutions, need and want commercial services, says Tim Verreault, executive vice president and chief operating officer of Evergreen Credit Union ($331.4, Portland, ME). We pride ourselves more for being a valued resource for Main Street businesses than we do for being the largest credit union producer of PPP loans in Maine.
To combat the potential long-term deleterious effects of the virus on the American economy, U.S. lawmakers passed the Coronavirus Aid, Relief, and Economic Security (CARES) Act in March 2020. The act established a $659 billion fund to provide business loans to cover staffing and other costs. The Paycheck Protection Program promised necessary funding for small business, and credit unions worked long hours to ensure their business members could tap into that assistance.
Most of the small businesses in our community had nowhere to turn for PPP loans as few lenders here were offering the program, says Pam Fleuette, CEO of Tidemark Federal Credit Union ($301.4M, Seaford, DE), a cooperative that serves rural areas, small towns, and a resort area on Delaware’s eastern coast. If their financial institution did offer the program, when they applied, they never got a response. We were able to turn applications around in one or two days.
Now, as PPP loans start to enter the forgiveness stage, credit unions must pivot from originating loans to educating borrowers about the various requirements to receive forgiveness.
We stand ready to provide additional assistance as needed, says Charles Friederichs, CEO of Central Minnesota Credit Union ($1.2B, Melrose, MN).
On July 6, the Treasury Department released data that shows the full scope of the Paycheck Protection Program. In a previous post, Callahan & Associates looked at the number of jobs saved by credit union PPP efforts. In the table below, the firm drills down further to uncover the credit union PPP leaders according to total number of loans made to borrowers in a given state.
How do you compare?