Banker

A prominent area bank is launching its own, $5 million small business fund to compliment state and federal efforts aimed at keeping these businesses from going under during the coronavirus pandemic.

Eastern Bank’s move goes beyond most banks’ approaches to date, of offering loan modifications and other friendly help to existing customers.

Small business have made clear they need support. The Baker-Polito administration introduced a $10 million small business loan fund through the Massachusetts Growth Capital Corporation on March 16. The fund was quickly oversubscribed, and the MGCC stopped accepting applications on March 19.

“First and foremost, obviously we know that the impact of the coronavirus and COVID-19 has been more wide-reaching than anything I have seen in my career,” Eastern Bank’s President Quincy Miller told Banker & Tradesman. “That’s the first thing that spurred us into action – we know the need is going to be great.”

Eastern started hearing from small businesses early on and wanted to be flexible in responding to their needs.

One solution announced this week is a $5 million fund Eastern Bank established to provide what it’s calling Small Business Impact Loans. Existing small business customers can borrow up to $25,000 at an interest rate of 3.99 percent, making interest-only payments for the first six months. Rhode Island-based Citizens Bank also recently committed to make $5 million in grants to help “community support initiatives” and small businesses across its 13-state service area.

In the first 24 hours after announcing the new loan fund, Eastern Bank saw high demand for the product, Miller said. The bank is leveraging its existing Express Business Loan platform to accept applications and streamline the underwriting process. The typical turnaround time for a loan is less than a week, but Miller said the time frame could stretch into a second week.

“We are very sensitive to our customers’ needs,” Miller said. “But given the demand, we expect to see a little bit of a delay to fund these.”

Based on how quickly the MGCC fund became oversubscribed, Miller expects existing customers to use up the funds available for Eastern’s Impact Loans. Should some of the $5 million remain, new customers would be eligible to apply.

Other options Eastern’s business clients can explore include refund requests on certain fees, penalty waivers for early CD withdrawals of up to $50,000, increased ATM card withdrawal limits, payment relief on commercial and small business loans, and waivers for late charges for loans.

Eastern is also the state’s top lender through the U.S. Small Business Administration and will be active with SBA programs to provide additional financing to existing and new customers.

Miller said a concern in the industry is how long the coronavirus crisis will affect small businesses. He said he was hopeful the economy would prove strong enough to weather the pandemic

“I think it’s important for banks, for nonprofits and for the government to all come together to support small businesses,” Miller said. “This is the time where as Americans, we need to come together.”