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Credit unions have mixed responses to PPP demands

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Application of the paycheck protection program. (Source: Shutterstock)

While Congress and the Trump administration have reportedly struck a deal to inject an additional $ 450 billion into the paycheck protection program, credit unions are working with anxious small business members who haven’t gotten the paycheck. approval of their loans during the first phase of the PPP.

However, since the SBA does not process PPP loan applications, some credit unions have stopped accepting new applications from its small business members, at least for now. But even if the new $ 450 billion in funding is approved later this week, it won’t be enough to provide loans to every small business in the country.

Last week, the PPP used up its $ 349 billion that funded loans for about 1.6 million small businesses, which is just 5% of the 30.2 million small businesses in the United States. The average national PPP loan was $ 216,000, according to Lendio, a Lehi, Utah-based Small Business Loan Marketplace.

The bad news is that even if the additional $ 450 billion gets the green light this week, it means many small businesses won’t get a loan.

“We estimate that at least an additional $ 850 billion would be needed to help small businesses survive the health and economic crisis we all face,” Lendio noted on his website. “Every day we chat with hundreds of small business owners who are still waiting for relief funds. They are stressed, anxious and frustrated. And to be honest, so are we.

This stress, anxiety and frustration is evident among small business owners who are members of credit unions.

“I want you to know that we understand the frustration you and other member companies in our community feel, both in keeping your businesses operational and in finding answers regarding the PPP loan”, Robert Gladu, assistant vice president of business services for the $ 2.7 billion Canvas credit. Union in Lone Tree, Colorado, said in a statement to its 4,000 small business owners.

With the PPP rollout earlier this month came a lot of confusion, delays and bad timing for lenders.

For example, the first set of interim PPP rules were released shortly before the SBA required small businesses to apply for loans from banks and credit unions. Canvas said it puts the credit union and other lenders on the spot because they don’t have the information to process the loans. Canvas said it did not receive the required login information for the SBA portal to submit applications until April 15, the day before the federal agency announced that the PPP fund had run out.

To bring immediate relief to its small business members, Canvas deferred more than $ 150 million in loan repayments.

” We allow [small business members] defer payment on auto loans, credit cards and overdraft lines of credit, ”he said. “We also help business owners themselves through consumer options. So we’re doing everything we can outside of helping the SBA to help our members and we’re getting great traction in this area, and our members really appreciate it. “

Scott Earl, president and CEO of the Mountain West Credit Union Association, said he has heard similar frustrations from many members of credit unions.

“Unfortunately, because the demand was so high, even after the credit unions went through the process, the majority [and now, all] funding was already gone, ”said Earl.

The state leagues, along with CUNA and NAFCU, have aggressively pressured Congress to provide a second round of PPP funding for small businesses.

Pending the approval of the second round, some credit unions do not accept any new applications.

According to its website Monday, the $ 11.7 billion America First Credit Union in Riverdale, Utah said it would not accept any new PPP applications at this time because the SBA is not processing requests.

At the end of 2019, America First was on the Top 100 Credit Union list among the most active 7 (a) SBA lenders, according to the federal agency.

America First said it has already contacted some of its small business members to let them know that their loans have been approved by the SBA and that they will continue to receive these funds. For other small business owners, their loan applications are in the credit union’s queue and will be processed if additional funds are approved.

“We apologize for any frustration caused by this rapidly evolving SBA process,” America First said in a statement. “We will continue to monitor the situation in Washington and hope to be able to facilitate more PPP loans soon. We remain committed to helping you and your business and appreciate your patience as we go through this unprecedented situation together. “

The $ 22 billion BECU in Tukwila, Wash., Has also decided not to accept further P3 requests, according to its website.

“Member companies that have submitted a PPP request will be contacted by email with an update on the status of your loan,” BECU said in a statement. “While we cannot guarantee that submitted nominations will be approved, we intend to continue processing submitted nominations in the hope that Congress will allocate more funds to this program.”

The $ 111 billion Navy Federal Credit Union in Vienna, Virginia said it will continue to accept applications from members of small businesses in the hopes that more funds will be available soon.

“We understand that small business owners face a lot of uncertainties right now, and we’re here to help them with relief options for the unique situations they face,” Navy Federal said.