How Financial Institutions Are Standing By Their Members During This Public Health CrisisWritten by Carly Simon-Gersuk
When the economy partially shut down earlier this year due to the public health crisis, most companies could not predict that more than six months later things would still be at a standstill. Now as stimuli have run out, many companies have had to layoff or furlough their employees. In response, being without a job or with reduced hours at work can make it difficult for people to pay their bills.
There is not much good about losing work, but there has been good in how financial institutions are working with their members impacted by the coronavirus through various programs. It is important to note that most financial institutions are providing relief on a case-by-case basis, but that should not stop anyone from reaching out directly for assistance. Institutions are providing members with assistance and guidance for, but not limited to, information about business funding options, fee waivers and payment deferrals.
For the millions of individuals impacted, here are some ways their financial institutions are helping.
Whether dealing with reduced cash flow or reduced operating hours; a single-owned and run or multi person employed business, business relief programs are offered by most financial institutions. One of the top funding options was under the Paycheck Protection Program (PPP), which was exhausted quickly. The PPP helped small businesses keep their employees on payroll. This was a popular option because the loan could be forgiven if the business followed particular standards, such as keeping the employee headcount, did not reduce employees’ wages more than 25%, and used it for eligible expenses. Other various programs have been developed to assist small, medium and larger scaled businesses that did not get to apply or exhausted their PPP.
Another option is Economic Injury Disaster Loan (EIDL). This loan for up to $2 million can be used to bridge business expenses during emergencies and disasters declared in your area of business. This works similarly to an emergency loan or loan advance since it assists to overcome the loss of revenue. In mid-April, about a month into shutdown, 755,476 EIDL emergency grants were processed totaling $3.29 billion, according to an article from CNBC.com. (1)
While businesses receive aid, which may last or have been exhausted, financial institutions may be able to offer a larger array of assistance for their members’ individual needs. Many institutions have established programs to help their members stay afloat in this time of hardship.
Partners Federal Credit Union, who has a large membership base of Disney employees, has helped its members through a variety of emergency loans, fee waivers, payment deferrals, and other relief services. An article in the Credit Union Times reports that Partners, “has waived more than $360,000 in fees, originated almost 3,000 emergency zero-interest loans and deferred 115,000 consumer and home loan payments.” (2) These aids have helped more than 70,000 members make some financial decisions with ease.
By reducing, deferring, or waiving fees members have a sense of financial security and ease as they weather the storm making ends meet. The Coronavirus Aid, Relief, and Economic Security (CARES) Act also offers some credit protections. Credit reporting agency data providers, including credit unions, must report loan modifications, including but not limited to forbearance and modified payments, resulting from coronavirus as “current” opposed to delinquent. (3) This reporting only applies to the accounts the consumer applies for and gets approved.
Financial institutions are here to help with various options for members and business owners. The most important step to take as a member is to reach out for assistance as soon as it is needed. With many others needing financial help, this is the time to be proactive in getting relief and funding.
Written by Carly Simon-Gersuk