What was it like to help these business owners and manage a federal loan program that had just been introduced the week before?
- Steve Ferber
- Steve Ferber is the director of commercial services at Mid Oregon Credit Union, the only credit union headquartered in Central Oregon.
When the federal government passed the Coronavirus Aid, Relief, and Economic Security act on March 27, it approved $377 billion in grants and forgivable loans to small businesses, with under 500 employees. The Paycheck Protection Program was designed to keep workers on the payroll, though there were some more flexible funds available as well.
Mid Oregon Credit Union, along with banks across the U.S., were flooded with applications, and federal funds ran out after 13 days. In late April, Congress passed an interim spending bill which added an additional $370 billion to the program. As of May 11, Axios reported that the second round of funding has not run out yet and loan approvals have slowed to less than $2 billion a day.
To date, Mid Oregon Credit Union has granted 185 loans to local small businesses, totaling more than $14 million, and is working on more every day.
Credit unions are nonprofit financial cooperatives owned by their members. This ensures lower loan rates and higher savings rates: Profits flow back to members. Commercial banks, on the other hand, are owned by shareholders who elect a paid board of directors that work to maximize shareholder profits.
Questions for Steve Ferber are in italics and the conversation has been lightly edited for clarity.
Source Weekly: What has it been like at the credit union since the federal government’s Paycheck Protection Program went into effect last month?
Steve Ferber: We’re not as overwhelmed as we were before because we’ve created a good system for processing applications. But it is still common for us to work seven days a week including some 12-hour days.
SW: Have you seen an influx of new customers since coronavirus hit and PPP was passed?
SF: We are getting quite a few new members. It is really nice to help a lot of small business and they are extremely grateful. Some were having trouble getting PPP through their banks. We prioritized our members first and but have also been able to help a lot of new people.
SW: Why do you think there has been such an influx in new members since the crisis hit?
SF: We’re community focused. All we do is in Central Oregon. Even those that weren’t with us previously, knew our reputation, they knew we were getting the applications done and that drove them to our door. We provide hands-on services for the banking needs of the community and that has certainly paid some dividends for this project.
SW: Why has Mid Oregon Credit Union been able to help some local businesses, when big commercial banks were not able to?
SF: We dropped everything to focus on PPP. Our team of six people, we beefed that up to 10, and also had help from the senior executive staff. We saw this as being really important. Even though it was a program that we knew nothing about, we attended webinars and dug into the materials and got very focused…. We knew a lot of small businesses were hurting and we just wanted to do what we could to help.
SW: Can you explain the sense of urgency around the PPP program?
SF: Whoever got there first, they got the money. When it first came out, no one had any idea what that really meant. We knew that it wouldn’t last forever, and then it only lasted 13 days. Now we’re working on a second batch, but already over $175 billion has been spoken for.
SW: Why were some businesses denied these loans?
SF: There were not many declines. The only reason that businesses didn’t qualify or weren’t eligible was if they didn’t have their paperwork together with tax returns and payroll records.
SW: How much has Mid Oregon Community Bank lent out to date?
SF: We’ve been able to help our members with 185 loans totally $14 million. There is a lot of small businesses in the area. We’re still processing 15 or 20 applications daily. Even really small operations, sole proprietors; we’ve done many loans under $2,000.
SW: What are some of your take-aways from this whole process and how it rolled out?
SF: At a high level, it was conceived in a positive way, but the devil is in the details. The rollout was extremely problematic because it happened so fast. Congress said ‘We are going to this’ before the Small Business Administration really had its hands around the program. But the SBA and government officials have been really responsive to our questions. They've gotten back to us usually within a day.
SW: There’s been some criticism of the SBA as a notoriously slow moving organization that would not be able to handle a program like this. How do you think they have performed?
SF: Given the volume they had to work with and in such a short period, and given the extreme circumstance, I think they did a good job. In a two-week period they processed as many loans as they have in the last 14 years
SW: How does the program work technically? Does the SBA give your bank a set amount of money to loan out?
SF: We use our own liquidity from members' deposits with Mid Oregon Credit Union. We would normally do something else with it, like making other loans or sometimes investing excess liquidity in short-term investments like CDs with other credit unions. The SBA guarantees these PPP loans and will pay 100% of the balance if the customer defaults.
SW: What should the community know about Mid Oregon Community Bank?
SF: Mid Oregon is here for the community. That’s all we do is support local consumers and local businesses. While it’s been trying times for our members and staff, we’re not yet done helping out how we can. We’ll be serving our members in other ways beyond the PPP program in the future… no one knows how long the effects of this will last on businesses.