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In this article, we cover some inspiring examples of how some Community Banks and Credit Unions went above and beyond to support local businesses, their communities, and employees during the COVID-19 crisis.
The tanking of the global economy has ensured more severely on small local businesses. Bigger enterprises are almost always able to fall back on national and international banks (and the Fed!) for re-establishing themselves after a setback but when it comes to small enterprises, banks and financial institutions seem to pull back more often than not – the obvious reason being the risk factor coming with financing smaller, local businesses. While helping the recuperating economy, financial institutions cannot overlook small businesses which is more than 40% of the economy. Despite their significance, small businesses do not get the support that they deserve.
Does that mean small businesses are doomed to be ill-fated? Well, perhaps not as long as credit unions and community banks continue to support them.
The Role of Community Banks and Credit Unions in Supporting Small Businesses
When it comes to supporting small businesses in the current recession, credit unions and community banks have fared much better as compared to bigger financial institutions.
- The community bank model is meant for resilience.
- As per the latest SBA’s PPP report, nearly 60% of 1.66 million of SBA approved loans through PPP were made by community banks of $10 billion in assets or less.
- Despite the pandemic, community banks have come up stronger to service customers in the initial series of funding.
- Following a relationship banking model, regional/community banks and credit unions offer a more flexible and personalized client engagement and faster processing of funds.
- The economic stimulus relief depends a great deal on the support that community banks and credit unions have been providing for small businesses.
Community Impact of Credit Unions and Small Community Banks during Coronavirus
Community banks and credit unions have been on their toes ever since the COVID-19 crisis began, assisting their members as much as possible. The financial support provided by community banks and credit unions has assisted more than 4.5 million small businesses with PPP loans. The PPP brought over $512 billion into the economy to keep small businesses running despite so many unforeseen effects of the pandemic.
Below are some specific examples of community banks and credit unions going above and beyond:
- OneAZ, Phoenix
The Phoenix-based credit union, OneAZ, donated 40,000 N95 respirator masks to the ICU at Banner Desert Medical Center. The center is treating patients diagnosed with COVID-19. OneAZ has also pledged $200,000 to COVID-19 community impact grants for region’s non-profits. “In these difficult times, support from local businesses and our community is helping Banner Health in so many ways as we work to keep our patients and our health care workforce safe.
- State Employees’ Credit Union (SECU), North Carolina
SECU of North Carolina and the SECU Foundation is coming up with $10 million as COVID-19 disaster relief. Both the bodies have pledged $5 million each. This is one of the largest relief funds (from the credit unions sector) since the beginning of the pandemic. The donation is aimed to assist the state non-profits in providing food, shelter, and other financial assistance to those in need due to the pandemic and the recession. The donation is also meant to support frontline healthcare workers. SECU, which has nearly 2.5 million members, is confident that the donations will help provide essential needs and services in its local communities and will also help boost morale among people.
- Michigan Credit Union Foundation (MCUF), Michigan
MCUF announced Community Crisis Support Grants in April. These grants were pledged for supporting and enhancing the community outreach initiatives during the pandemic. The Foundation has donated nearly $101,707 in 28 grants. The total impact turned out to be more than $200,000 since these grants supplemented credit union investment. The grants were given individually to credit unions and also to cooperative groups and chapters of the credit unions. The initiatives include a wide range of causes such as protective gear and food for frontline workers, food deliveries in food deserts, financial support for a women’s shelter, and financial education for the students whose school year was cut short.
How Small Community Banks are Keeping Workers Safe While Resuming Business
The economy is opening up gradually but most businesses (including banks) are treading carefully when it comes to returning to offices. Here’s how some of the regional banks are setting examples for reopening.
- People’s Bank of Washington – The Bank has introduced drive-through services for its teller-based services. It has also begun appointment-based scheduling for services such as notary services, new account opening, treasury management, and even for small business lending. It has also made some of the services available on the phone. Employees are directed to sanitize/wash their hands frequently to cut down the risk of viral spread through cash.
- United Community Bank (Minot, ND) – The Bank has made sure that its offices remain germ-free with frequent disinfection, cleanliness awareness, and strict social distancing policies to ensure the safety of its employees and customers.
What Banking Institutions Can Learn from Local Financial Institutions
- Prioritizing People over Profits: The banking sector is known for being highly focused on retaining and enhancing profits and reducing risk. In all this high-stakes frenzy, banks forget to prioritize the humanitarian aspect of financial services. Banks need to see their customers as humans with families, commitments, and goals rather than just a balance sheet number.
- Giving back to the Society: One of the biggest learnings that bigger financial institutions can take away from credit unions and community banks is the principle of serving the community. Many credit unions involve themselves in some form of community engagement that results in benefiting the community in more than just financial terms. Helping enhance financial literacy is one of the best efforts that have been made by credit unions across the country.
- Making Lending Personalized: Some of the big lenders have done exemplary work in making the lending process faster and digitally powered. But what credit unions and community bank lack in tech, they make it up in offering bespoke personalized services.
Community Banks and Credit Unions have been a great blessing for small local businesses that were left stranded by the big banks after the 2008-09 economic recession. Credit unions and community banks already have a rich history of powering local financial services and community welfare. In times like these, where two crises (coronavirus and recession) are still prevailing on a global scale, local/regional financial institutions are changing the narrative by being the first one to respond to the needs of local small businesses.
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