Ion Bank, based in Naugatuck, has just had the busiest few days in its 150-year history, thanks to the launch last Friday of a much sought-after small business stimulus program.
Ion, who has a loan portfolio of around $ 1 billion, reviewed and approved hundreds of applications totaling more than $ 100 million for federally backed stimulus loans between Friday and Monday.
It is the fastest and most significant jump in the bank’s loan portfolio that has ever taken place.
“We definitely have a backlog now,” CEO David Rotatori said Tuesday morning. “The good news is that the vast majority of our customers [to the Small Business Administration] during the weekend.”
Ion Bank is far from the only one. Low-interest stimulus loans – which are forgivable if employers adhere to various rules – have many Connecticut bankers busier than ever before.
There has been a strong demand vying for $ 349 billion in loans from the Paycheck Protection Program, which launched last Friday, and it’s created headaches and anxiety for bankers and clients.
Rotatori said his team, who are already working long hours, are grappling with whether to enter loan applications overnight when the SBA’s computer system is taxed less.
While the program, which aims to help small businesses cover salaries and other expenses during the COVID-19 pandemic, it will also help banks, which otherwise face expected revenue declines and loan losses. higher due to the ongoing partial shutdown of the economy, to alleviate some of their own financial worries.
Two-year loans carry an interest rate of 1%, with the principal deferred for the first six months. The SBA also pays participating lenders a processing fee ranging from 1% to 5%, depending on the size of a given loan.
For the $ 100 million in loan applications already processed by Ion Bank, which so far has an average loan amount of around $ 300,000, the increase in loans could represent more than $ 6 million in revenue.
The bank has already pledged $ 1 million to the United Way, but the rest of the money it earns will help offset the need for Ion – who has received $ 120 million in loan modification requests during the ongoing pandemic – to set aside more money for expected loan losses due to the economic downturn, Rotatori said.
“These funds will definitely help recover some of that,” he said.