TFederal coronavirus emergency relief funds have hit Oregon businesses in waves. As many local businesses struggled to pay rent and payroll, they rushed to their local banks and credit unions, competing with businesses across the United States for funds that could run out anyway. day.
What was it like helping these business owners and managing a federal loan program that had just been introduced the week before?
Steve Ferber is the Director of Commercial Services at Oregon Central Credit Union, which operates seven branches across the region. Ferber spoke to Source on the role of the credit union in processing federal emergency relief loans to local small businesses.
When the federal government adopted the Aid, relief and economic security linked to the coronavirus on March 27, it approved $ 377 billion in grants and forgivable loans to small businesses with fewer than 500 employees. The Paycheck Protection Program was designed to keep workers on the payroll, although there are more flexible funds available as well.
The Mid Oregon Credit Union, along with banks across the United States, were inundated with requests and federal funds ran out after 13 days. In late April, Congress passed an interim spending bill that added an additional $ 370 billion to the program. As of May 11, Axios reported that the second round of financing is not yet depleted and loan approvals have slowed to less than $ 2 billion a day.
To date, Mid Oregon Credit Union has made 185 loans to local small businesses, totaling over $ 14 million, and working more every day.
Credit unions are non-profit financial cooperatives owned by their members. This ensures lower lending rates and higher savings rates: the benefits accrue to the members. Commercial banks, on the other hand, are owned by shareholders who elect a paid board of directors that works to maximize shareholder profits.
The questions for Steve Ferber are in italics and the conversation has been edited slightly for clarity.
Weekly Source: How has it been at the credit union since the federal government’s paycheck protection program came into effect last month?
Steve Ferber: We are not as overwhelmed as we used to be because we have created a good system for processing applications. But it’s still common for us to work seven days a week, including a few 12-hour days.
SW: Have you seen an influx of new customers since the coronavirus hit and PPP was passed?
SF: We welcome quite a few new members. It is really nice to help a lot of small businesses and they are extremely grateful. Some had difficulty obtaining PPPs through their banks. We prioritized our members first and were able to help a lot of new people as well.
SW: Why do you think there has been such an influx of new members since the start of the crisis?
SF: We are community driven. All we do is in central Oregon. Even those who weren’t with us before knew our reputation, they knew we were dealing with requests and it got them to our doorstep. We provide practical services for the banking needs of the community and it has certainly paid off for this project.
SW: Why was the Mid Oregon Credit Union able to help some local businesses when the big commercial banks weren’t able to?
SF: We gave up everything to focus on PPP. Our team of six, we have strengthened it to 10, and have also benefited from the help of senior management. We saw this to be really important. Even though this was a program we didn’t know anything about, we attended webinars and dug through the material and got very focusedâ¦. We knew a lot of small businesses were struggling and we just wanted to do what we could to help them.
SW: Can you explain the sense of urgency around the PPP program?
SF: Whoever got there first got the money. When it first came out, no one had a clue what it really meant. We knew it wouldn’t last forever, and then it only lasted 13 days. Now we are working on a second batch, but already over $ 175 billion has been announced.
SW: Why have some companies been refused these loans?
SF: There haven’t been a lot of drops. The only reason businesses weren’t eligible or weren’t eligible was if they didn’t have their documents with tax returns and payroll records.
SW: How much has the Mid Oregon Community Bank loaned to date?
SF: We were able to help our members with 185 loans totaling $ 14 million. There are a lot of small businesses in the area. We still process 15 or 20 requests per day. Even very small farms, sole owners; we have made many loans under $ 2,000.
SW: What are some of your takeaways from this whole process and how did it go?
SF: At a high level it was designed in a positive way, but the devil is in the details. The deployment was extremely problematic because it happened so quickly. Congress said “We’re going” before the Small Business Administration actually got hold of the program. But the SBA and government officials were very responsive to our questions. They usually answered us during the day.
SW: There have been criticisms of the SBA as a notoriously slow organization that would not be able to manage a program like this. How do you think they behaved?
SF: Considering the volume they had to work with and in such a short time, and given the dire circumstances, I think they did a good job. In two weeks, they processed as many loans as in the past 14 years
SW: How does the program work technically? Does the SBA give your bank a fixed amount to lend?
SF: We use our own cash from members’ deposits with the Mid Oregon Credit Union. We would normally do something else with it, like make more loans or sometimes invest excess cash in short-term investments like CDs with other credit unions. The SBA guarantees these PPP loans and will pay 100% of the balance in the event of customer default.
SW: What should the community know about Mid Oregon Community Bank?
SF: Mid Oregon is here for the community. It’s all we do is support local consumers and local businesses. Although times have been difficult for our members and staff, we are not yet done helping in whatever way we can. We will serve our members in ways other than the PPP program in the futureâ¦ no one knows how long the effects of this will last on businesses.