PPP: Also Available From Your Credit Union

PPP: Also Available From Your Credit Union

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As of January 31st, 4,942 lenders were participating in the new 2021 Paycheck Protection Program. The vast majority are banks, but credit unions are doing their part as well.

According to the Small Business Administration (SBA), during the first month of 2021, 33,714 loans were approved via 729 credit unions with less than $10 billion in assets. The average loan size for this group is $52,610. Eight larger credit unions are also participating with 2,541 loans totaling $106.3 million.

This is fewer than 2020 when third quarter call report data shows more than 850 credit unions distributed a total of nearly $9 billion among more than 191,000 businesses. The average loan size for 2020 was a little lower at about $47,000.

In this second round, not only do we see a somewhat smaller number of participating credit unions, the demand seems to be lower as well. But applications are still flowing in and could continue through March. Of the more than 6.040 million loans approved through January 31st, only 891,044 of them are from this 2021 iteration.

The overall average loan size for 2021 is $82,000; 68% are $50,000 or less. Accommodations and food service industries continue to be the most in need as 18% of all 2021 loans have been distributed to these sectors. But that’s no surprise.

Credit unions don’t make the Top PPP Lender List as those slots are generally occupied by Big Banks. But as we said, they are doing their part for their members. Those with the most PPP money outstanding from Round 1 as of September 30, 2020 can be found on page 7.

The first is 4-Star Mountain America FCU, Sandy, UT, which distributed over 7,000 PPP loans in Round 1 and is actively involved in helping its business members with either a first or second draw loan now with Round 2. It is inviting business members to apply for Round 2 if they received Round 1 from another lender.

In Round 1, Mountain America business members received $350 million worth of PPP. That is considerably more than the one behind it, 5-Star Self-Help Federal CU, Durham, NC.

Self-Help FCU is a much smaller credit union, though ($1.5 billion in assets as opposed to $11.4 billion at Mountain America). To put it another way, Mountain America’s PPP loans account for just 3.8% of its total loan portfolio. Self-Help’s $184 million in PPP represents over 15.5% of total loans.

From Self-Help Federal Credit Union’s website:

“Self-Help’s Paycheck Protection Program (PPP) lending is strongly focused on assisting nonprofits and small businesses run by women and people of color, especially those that currently partner with us for financial services or social justice.”

Self-Help proudly reports that:
- 59% of its PPP has gone to business or nonprofits run by people of color;
- 66% has gone to nonprofits; and
- 19,895 jobs have been retained due to its efforts.
- Its median loan amount: $21,000.

The stories may differ but the goal is the same: to help small businesses and non-profits stay afloat and retain employees. It was that way under previous NCUA chairman Rodney Hood and will continue that way under the new chairman, Todd Harper.

Appointed under President Trump, Mr. Hood was the first Black American to lead any federal banking agency. He was sworn in April 2019 and led the agency until January 25th of this year when President Biden’s nominee, Todd Harper, took the lead. The two have worked together on the board for years, so we don’t expect any major shift in operations.

Nor do we expect the strength of the credit union industry to be impacted by PPP loans. If you look at the list on page 7, all 51 of these largest PPP lenders are recommended by Bauer (rated 5-Stars or 4-Stars). Also, at least in most cases, Bauer’s Adjusted Capital Ratio is not much lower than the Regulatory Capital Ratio. That means loan quality is also good. In fact, at this point, the majority of the credit union system is in quite good shape. Next week, we will fill you in on those that are not.

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