By Sheryl S. Jackson

While many credit unions found themselves pulling additional staff from regular responsibilities to help the commercial loan department handle the unprecedented influx of applications for Paycheck Protection Program (PPP) loans, the leaders and staff at True Sky Credit Union faced a different challenge.

“We had never done a small business loan before, so we had to start from the ground up — starting something new,” says Mike Shockley, vice president of lending for True Sky. “We had never worked with the Small Business Administration (SBA) before, but they did a great job helping us get through the registration process so we could offer PPP loans and making sure we were able to access the portal.”

“We had already been moving in the direction of providing commercial loans and had been discussing it after hearing from members that they needed someone willing to work with small or micro businesses,” says Jon Skelly, vice president of marketing for True Sky. “The demand for PPP loans gave us a way to start offering a new service to help members who were not receiving help from their other financial institutions.”

All in on PPP

Skelly describes the initial PPP team as an impromptu group of branch managers and staff from other departments that had some experience with personal loans who were willing to learn as they went. “We had employees working at 4 a.m. because they could get into the portal to upload applications at that time,” he says.

The definition of “bankers’ hours” changed for every credit union employee working on PPP loans, admits Kathleen Metz, vice president of lending for Affinity Federal Credit Union. “Because our employees were working from home, many would set their alarms to wake in the early hours to upload applications at 2 a.m.”

There was no need to publicize PPP loans. In fact, Affinity had 1,000 applicants express interest in the loans between the Thursday evening and Friday morning that the program went live, says Metz. “We used email blasts to contact each applicant to let them know each time their application moved to the next step of the process and we also called every person,” she says. “We had all 12 people in our commercial lending department, our chief financial officer, the human resources department and front-line bankers contacting applicants — at one point 30 to 40 percent of our employees were working on PPP.” This was possible because only drive-through windows were open and branch lobbies were closed except for appointments. “This freed other employees to help with PPP’s initial crunch,” she adds.

“There was a lot of desperation throughout the first round of PPP, but as we moved into the next round of monies available, there was less anxiety,” says Metz. In the first round, Affinity handled 1,057 loans for a total of $57 million. “Our loan department was busy throughout 2020 — in addition to PPP loans, we also handled $40 million in other commercial loans, as well as other small business and real estate loans,” she says.

Stepping up to Meet Demand

Even credit unions with an existing commercial lending department had to make some quick changes to handle the volume of PPP loan applications. At Hudson Valley Credit Union, about 100 commercial loans are handled each year. In the first few weeks of the PPP program, the credit union received 600 loan applications.

“At first, we were handling hard copies of applications and pulling people from other departments to help — more than 20 employees at one time,” says Vicki Batten, assistant vice president of business services for Hudson Valley. Although the credit union had an online platform for business loan applications, it needed to be quickly built out to accommodate the new PPP format. “Until that was completed, the painful paper route was coupled with efforts to train people who had not previously worked with business loans to help complete the process.” The challenge was exacerbated by the ongoing PPP rules and application form changes, she adds.

Efforts were successful with a total of nearly 900 loans in the first round, totaling $34 million. “The average loan was only $38,000, but for small business owners, that is a big loan that means a lot to keeping their business running,” says David Wright, assistant vice president of loan origination for Hudson Valley. Initially, the credit union only offered PPP loans to existing members, but as processes were put in place to handle loans more efficiently, the loans were opened to non-members.

“After the first week of the program, some other local financial institutions shut down the program, so we were getting calls from small business owners asking for help because their institutions wouldn’t take their loan applications,” says Hudson Valley’s Batten. “We set them up as members and took their applications.”

True Sky also helped non-members. In fact, one new small business member appeared in a video for the credit union to describe his experience looking for a PPP loan when his financial institution would not help. “He describes how he also plans to move all of his business to the credit union by the end of the year,” says Skelly.

Despite the late — and early — hours worked, challenges to overcome and confusion at the start of the program, there were some rewarding moments, recounts Wright. “When a phone call was made to let one business owner know that their PPP application was approved, we were still on the line when the owner called out to all employees to let them know about the approval,” she says. “Hearing all of the employees clapping and cheering is what kept us going.”