Loans, extensions assist members in need during pandemic
Highest level of demand is for extending or skipping payments.
When Wisconsin instituted a stay at home order and schools shifted to online learning, a single father of two who didn’t own a computer had to figure out a way to ensure his children had the tools to continue learning during the coronavirus (COVID-19) pandemic.
“Once the stay at home order was placed and school was postponed for the foreseeable future, I had to purchase a computer, desk, and chair,” the man says.
A brewery employee, the man is considered an essential worker. But the overtime he’s used to working has decreased and is affecting his finances.
The man is one of many who have gone to UW Credit Union in Madison, Wis., in search of financial assistance.
“The response from our members was immediate and sustained,” says Mike Long, executive vice president and chief credit officer at the $3.3 billion asset credit union. “It’s definitely been a busy time serving members in their time of need, and we’ve responded in a big way.”
UW Credit Union began offering emergency loans and payment extensions in mid-March. Since then, it has assisted more than 1,000 members with $2 million in emergency loans.
The credit union has also processed more than 4,000 payment extensions across all loan types, Long says.
While credit unions offer emergency loans for members who are struggling financially, more members seem to be contacting their credit union to skip or extend payments, according to credit union leaders.
That’s the case for BCU in Vernon Hills, Ill., which has issued about $700,000 in emergency loans but has assisted “thousands” of members with payment extensions, says Jim Block, executive vice president/chief operating officer for the $3.9 billion asset credit union.
Block believes the uncertainty surrounding the economy is one factor leading to increased requests for payment extensions. He notes few of these members had contact with the credit union’s collections team before COVID-19.
“Most are extending payments because they are nervous about the future, not because they have experienced any income disruption,” he says.
While Frontwave Credit Union in Oceanside, Calif., offers financial assistance, the credit union isn’t seeing the demand it was anticipating.
Less than 1% of members have opted to use financial assistance programs, says Todd Kern, chief marketing officer at the $920 million asset credit union.
As of April 21, the credit union approved 1,222 payment extensions totaling more $842,797 on more than $36 million worth of principal balances. It also funded 35 financial assistance loans for $105,750, Kern says.
“We’re still early in the process,” he says. “We have seen some members skipping payments to proactively hang on to cash in preparation for whatever may come next and to prepare for a potentially longer cycle of [slower] economic activity than is expected.”
That response is similar to what New Horizons Credit Union in Mobile, Ala., is experiencing.
Due to stimulus checks from the federal government, there hasn’t been much demand for the credit union’s “coronavirus assistance” loan, says Patty Veal, vice president of marketing and business development at the $197 million asset credit union.
However, members are seeking information about deferring payments or refinancing existing loans which have high interest rates. Members can also opt for 90 days of no payments on new consumer loans.
“Assistance for any crisis does not necessarily have to be named after the crisis,” Veal says. “Assistance is always there.”