LANSING, Mich. — During the peak of the COVID-19 economic crisis, credit unions, as member-owned, consumer-focused financial co-ops, have stepped into a small business lending sector traditionally dominated by for-profit banks.
Serving 55% of Michigan’s population and owned by their 5.5 million members, credit unions are 90% focused on consumer borrowing and savings needs. As such, they have been responding with emergency cash loans, delays on foreclosures, repossessions and fees and deferrals on mortgage and loan payments. These needs have been extraordinary during this climate.
Despite this, more than 50 Michigan credit unions moved quickly to become SBA-approved lenders and to compete against the nation’s largest banks to make Paycheck Protection Program (PPP) loans available to both existing small business members as well as to new members unable to get funds from their existing bank.
The Michigan Credit Union League (MCUL) estimates that over $500 million has been loaned to more than 10,000 very small businesses, whom on average had just 5 employees. The median average loan size was just $20,000, and more than 10% of these very small businesses became new members after being unable to borrow from their existing bank.
“Credit unions continue to show their not-for-profit difference by focusing on those hardest hit, and often those left behind during a financial crisis,” according to MCUL CEO Dave Adams. “The small main street restaurant, the hardworking homebuilder, the beauty salon owner and so many others have found, and will continue to find, a helping hand from a local credit union.
“These loans are not made for profit. The credit union mission always puts service and compassion first."
In anticipation of the SBA’s program launch, many SBA-approved Michigan credit unions prepared for the loan process by reaching out to business members to help them prepare for the application. Additionally, 15 Michigan credit unions that were not previously SBA-approved became certified in order to heighten access to PPP loans for members.
“We could not have anticipated the consistently high call volume we would receive from business owners looking for financial relief; we continue to receive calls daily,” said Molly Salvi, organizational communications manager for Community Choice Credit Union.
At the time of this report, the credit union has assisted with the input of 641 applications, which were approved for a total of $38 million.
“Naturally, business owners are concerned for their business and their own family, but they’re also worried about their employees,” continued Salvi. “They feel a deep sense of responsibility for making sure everyone is taken care of right now, and we’re doing our best to help them achieve this.”
Of the 10,000 loans from Michigan credit unions, 1 in 10 are new/non-members that came to credit unions seeking assistance. Community Choice makes up for nearly half of those new business accounts.
Michigan credit unions’ average loan sizes were a tenth of the average size of bank PPP loans — approximately $20,000 per loan to banks’ $218,000 — meaning their focus has been assisting the small businesses that may not get the same consideration at larger institutions.
“Banks large and small have done a tremendous job serving their business customers,” says Adams. “But where credit unions really stepped up was with both the very small businesses and those who, for whatever reason, were unable to get service from their bank.”
One business member, Matt Buskard, owner of Bobcat Bonnie’s in Detroit, said joining a credit union was one of the best decisions he could make, “During a time when we all have the option to assist others or judge them, the credit union has chosen to assist me, truly proving that we are all in this together and they are here to help.”
“Communication was wonderful, and I couldn’t have asked for a better experience during difficult times,” said one applicant and LAFCU member, David Trumpie of Trumpie Photography. “I just keep hearing stories of everyone having nightmare experiences, and everything went great for me. I will be working to move the remainder of my banking to LAFCU going forward. This PPP loan will certainly help in a very tough time.”
“Because of [Community Choice], I didn’t think that my application was just going into a black hole somewhere,” said Nicole Pasuit, CEO of TechStak in Ann Arbor. “I knew there would be follow through ... I felt confident in submitting my application and most of all hopeful.”
LAFCU CEO Patrick Spyke said, “There are businesses who have already opened their eyes to a credit union, and those that would benefit from doing so. Credit unions are serving small businesses … period. Many small businesses couldn’t seem to get traction with their financial institution and are now opening their eyes to the power of credit unions.”
Want to see more local news ? Visit the FOX47News Website.
Stay in touch with us anytime, anywhere.
Sign up for newsletters emailed to your inbox.
Select from these options: Breaking News, Severe Weather, School Closings, Daily Headlines and Daily Forecasts.