While the economy seems to be recovering, some businesses and families are still struggling, and banks are reaching out to help. Central Bank Chairman, President and CEO Luther Deaton announced in April that it would be partnering with the Brighton Center, a Northern Kentucky nonprofit, to offer the Central Credit Connection Loan, a micro loan for families and individuals struggling during the pandemic.
The Connection Loan offers qualifying families and individuals earning less than $64,079 annually the opportunity to borrow between $500 and $3,500. The loans can be used for just about any purpose and are open to bank customers and non-customers. Borrowers who are entered into the Brighton Center’s Credit Smart Program, a financial education program, will receive a lower interest rate.
In exchange, the Brighton Center will refer clients who come to them with financial concerns to Central Bank for the loan.
“We looked at their requirements for their Credit Smart Program and at our requirements for our existing small dollar loan and kind of meshed and married the two to come up with a program that would meet their needs and that was acceptable from our credit risk standpoint,” said Chris McGaughey, community development o.cer with Central Bank. “In doing so we, in essence, redeveloped our existing small-dollar loan program that we have available through all of our branches.”
With terms of 12 to 36 months, depending on the applicants ability to pay, the loans are designed to help low- to middle-income people establish or re-establish credit, or to meet short-term cash needs, McGaughey said. In revamping the program, the bank increased the credit limitation and eliminated what they saw as some of the credit barriers on the previous loan program to make it more accessible to those who may not have traditional credit, she said.
Diana Webster, retail development officer for Central Bank in Northern Kentucky, said that while the program was relatively new, there were people working through the Brighton Center who were waiting for the program to start.
At Republic Bank, individuals and families can get help through the bank’s website.
“On the consumer side of this discussion, we have participated in virtual events focused on individuals, family money management and debt management,” said Todd Ziegler, Republic’s Central Kentucky market president. “Republic’s online banking platform provides debt- and budget-management tools that help individuals and families plan their finances more effectively.”
For Republic, helping small businesses and entrepreneurs during the pandemic is key. In response to the pandemic, the bank created a fund to support businesses.
“In response to the challenges of 2020 and the issues around economic equality, Republic Bank created a Community Loan Fund for businesses seeking loans up to $50,000,” Ziegler said. “The intent behind the Community Loan Fund is to support small businesses and promote business development and job creation in communities impacted by inequality and inadequate access to capital.”
In an effort to make applying easier, the application for the loan is only one-page long, and a dedicated processing team helps businesses seeking the loan.
Republic has also helped hundreds of businesses apply for Paycheck Protection Program loans, he said, resulting in more than $750 million flowing to area businesses and helping to retain 39,488 jobs in Kentucky in 2020.
“Republic Bank understands the importance of serving the community, as exemplified in our long history of working with the Small Business Administration [SBA] to meet the needs of our small business clients — earning us a ‘Preferred Lender’ designation with the government agency. Given this relationship, upon the onset of the pandemic and mandated shutdowns, Republic was uniquely positioned to ensure a swift rollout of the Paycheck Protection Program [PPP],” he said.
“PPP loans were, and continue to be, a necessary lifeline for small businesses across the country… Decades-old businesses and start-ups alike were affected, meaning many companies are taking advantage of the assistance provided by these programs, and the response has been overwhelmingly positive… In fact, we happily served over 800 businesses that were not originally our clients with getting a PPP loan.”
At Central Bank, Greg Shewmaker, executive vice president of retail services, said the bank had issued nearly 4,000 PPP loans totaling more than $590 million. He estimates it will total more than $600 million by the time the program ends.
In March, President Joe Biden’s American Rescue Plan increased and expanded eligibility for government assistance programs like the PPP, Economic Injury Disaster Loans (EIDL) and Shuttered Venue Operators Grant Program. Additionally, the stimulus plan established the Restaurant Revitalization Fund to help restaurants during the economic crisis.
“It was set to expire March 31, and it’s been extended to May 31, and we’re taking applications every day,” Shewmaker said.
“More than 3.7 million businesses, employing more than 20 million people, have found financial relief through SBA’s Economic Injury Disaster Loans. The EIDL provides low-interest emergency working capital to help save their businesses.” —SBA administrator Isabella Casillas Guzman
In early April, the Small Business Administration increased the maximum amount small businesses and nonprofit organizations could borrow through the EIDL program. The new limit for COVID-19 EIDL loans is $150,000 for six months of economic injury and up to $500,000 for 24 months of economic injury.
“More than 3.7 million businesses, employing more than 20 million people, have found financial relief through SBA’s Economic Injury Disaster Loans. The EIDL provides low-interest emergency working capital to help save their businesses,” said SBA administrator Isabella Casillas Guzman. “However, the pandemic has lasted longer than expected, and they need larger loans. Many have called on SBA to remove the $150,000 cap. We are here to help our small businesses. That is why I’ve decided to more than triple the amount of funding they can access.”
In March, the SBA announced that it would extend deferment periods for all disaster loans, including COVID-19 EIDLs, until 2022 to o er businesses more time to build back. In order to do this, the SBA pushed back the first payment due date for disaster loans made in 2020 to 24 months from the date of the note and to 18 months from the date of the note for all loans made in 2021.