COVID-19 has had a devastating impact on the economy, but this is when credit unions shine the most. Right now there is an opportunity for credit unions to help small business tap into the resources Congress allocated for small businesses in the recently passed “The Coronavirus Aid, Relief, and Economic Security Act” (also known as CARES Act). This includes the “Paycheck Protection Program” (PPP) for small businesses. If your credit union is already making or wants to make PPP loans, we want to hear from you.
Banks are currently overwhelmed and shutting their doors to applicants due to the sheer volume of interest. This is an excellent time for credit unions to fill the void and support their communities. Wells Fargo, the largest small business loan lender, recently announced that they will not be accepting new PPP loan applications. When these small businesses look for other financial institutions to fill the void, they need a central marketplace. CUCollaborate has created a website called Balanced Wallet that will connect small businesses with CUs they are eligible to join.
Balanced Wallet will ask a few short questions around field of membership and then show a list of credit unions that a potential member can receive a PPP Loan from. While the website is free to use for credit unions and potential members, we need to know which credit unions are making these loans so we can connect business owners and credit unions. Please contact us if you want to be listed on the website. We believe in the credit union difference and we hope that Balanced Wallet will help connect credit unions with those in need. For more information please visit: https://balancedwallet.com/credit-union-faqs/
Overview of the Paycheck Protection Program
Any Federally Insured Credit Union is eligible to offer these loans to small businesses. This is a great opportunity to help small businesses hurting in your area as well as attracting new members. Last Wednesday is when the Treasury Department and the SBA released guidelines around the loan which makes it fairly new to the market. There is currently a rush from small businesses to access this capital.
- The guarantee percentage is 100 percent.
- No collateral will be required.
- No personal guarantees will be required.
- The interest rate will be 100 basis points or one percent.
- All loans will be processed by all lenders under delegated authority and lenders will be permitted to rely on certifications of the borrower in order to determine eligibility of the borrower and the use of loan proceeds.
As a credit union, you will be issuing the loan for the SBA. The best part is that you can use your own loan process to determine if someone is eligible. These loans are fully backed by the SBA and are a less risky type of lending. The SBA has just recently released the documents needed for non-SBA lenders to receive fast track approval. You will need to fill out the following: