Lending, loan modifications, and paycheck protection program underwriting were among the top topics discussed by credit union lenders during a recent round table discussion.
Last week, credit union lenders with assets exceeding $ 1 billion participated in CUNA’s Business Lending Roundtable: The COVID-19 Pandemic and Credit Unions. Lenders to smaller credit unions attended similar events earlier this week.
CUNA offers the series of recorded discussion webinars as a free member benefit. You can find them on the CUNA COVID-19 resource page.
The main topics discussed by the participants included:
► Small Business Administration (SBA) Paycheck Protection Program (PPP) loans. About two-thirds of the participants from larger credit unions take part in the PPP. They discussed how much to fund PPP loans, when to grant forgiveness, and how to validate borrower data and documents.
Last week, President Trump signed a bill that would add $ 310 billion to the PPP fund, with $ 60 billion allocated to credit unions and small community banks. However, lenders weren’t sure how many small businesses would get funding as a backlog emerged when the first round of funding expired earlier this month.
“While the SBA has reopened its portal to accept additional loan applications, we continue to hear from credit unions that the SBA’s ETran system is experiencing unprecedented demand that is further slowing response times. It is imperative to stay vigilant and active with the ETran system, ”said Jared Ihrig, Chief Compliance Officer of CUNA. “We also expect inquiries for credit unions to increase this week as consumers are in some cases encouraged to turn to smaller lenders as they may have a better chance of getting funding for their loan applications.”
► Credit changes. Many credit unions offer deferred credit. The participants discussed whether automatic deferrals should be granted or documents to prove the need be required and how the risk ratings of these loans can be adjusted.
► Insurance. While credit unions are still making new loans, they have to adjust underwriting standards in the face of high unemployment and loss of income.
“It’s about checking current employment and income,” said Joe Hyatt, partner and chief credit officer, Development Finance Training and Consulting. “We typically rely on historical performance in making these loans. Can we still do that and how safe is it? “
Lenders should try to be flexible in trying to meet members’ financial needs, says Patricia O’Connell, senior federal compliance counsel at CUNA. But they should also weigh the security and soundness of the credit union and use reasonable efforts to be conscientious.
The documentation should indicate that COVID-19 was a factor in the decision-making process, she says.
► Member communication. Credit unions communicate with their members through a variety of channels including websites, emails, and phone calls. Not only do credit unions tell their business loan members how the credit union can help, they also check how those members are doing.
“We don’t know what the new normal will be,” said Dana Sumner, President / CEO of Development Finance Training and Consulting. “We are in uncertain times and do not know what to expect. We have to adapt when it comes and be as proactive as possible. “
