By Michael Kitch

NH Business Review

While the business community awaits the relief promised by the federal government, New Hampshire financial institutions and state agencies are taking steps to ease the pressures and provide liquidity to hard-pressed small enterprises and nonprofit organizations.

New Hampshire Banking Commissioner Jerry Little said that the Federal Financial Institutions Examinations Council (FFIEC), issued a statement on March 22 encouraging “financial institutions to meet the financial needs of customers and members affected by the coronavirus.”

The FFIEC consists of the Federal Reserve Board, Consumer Financial Protection Bureau, Federal Deposit Insurance Corp., National Credit Union Administration, Comptroller of the Currency and Conference of State Bank Supervisors. The regulators noted that “financial institutions should work constructively with borrowers and other customers in affected communities.”

In a separate statement, the FDIC encouraged financial institutions “to provide borrowers affected” by the Covid-19 outbreak “with payment accommodations that facilitate their ability to work through the immediate impact of the virus. Such assistance provided in a prudent manner to borrowers facing short-term setbacks could help the borrower and a community to recover.”

The FFIEC assured financial institutions that “prudent loan modifications” made in response to the Covid-19 crisis would not be criticized by regulators. Nor would institutions be required to classify these modified loans as “troubled debt restructurings.”

Likewise, the Financial Accounting Standards Board (FASB) confirmed that short-term loan modifications made in good faith to borrowers current before receiving the relief would not be deemed as troubled debt.

The FFIEC statement reads, “Views prudent loan modification programs to financial institution customers affected by Covid-19 as positive actions that can effectively manage or mitigate adverse impacts on borrowers due to Covid-19, and lead to improved loan performance and reduced credit risk.”

Commissioner Little said that he has urged the 16 state-chartered banks and 10 credit unions that he supervises to follow the guidance of the federal agencies.

He stressed that these financial institutions are all well-capitalized with significant liquidity and “very much able to work with borrowers to alleviate financial pressures arising from the impact of the coronavirus. This is an extraordinary moment.”

He noted that, unlike the Great Recession, “this is not a problem arising from the financial services industry.” To the contrary, he repeated that financial institutions are “prepared to do whatever they can to minimize its adverse economic impacts.”

Meanwhile, Little stressed that banks are committed to ensuring depositors uninterrupted access to their cash.

“Many branches have closed their lobbies,” he said, “but are providing a full range of services from their drive-up windows and ATM machines.”

Branches without drive-up facilities are closed. He said that banks have been designated as essential employers and customers may contact their banks by telephone.

“I’ve heard of banking staff arranging to meet with customers in the parking lot,” he said. “They’ve come out with all the necessary paperwork and done their business outdoors.”

‘We stand ready’

James Key-Wallace, executive director of the state Business Finance Authority, said the agency has two loan programs for both businesses and nonprofits.

The Capital Access Program, or CAP, can lend up to $200,000 to small businesses and nonprofit corporations with less than $5 million in annual revenue for working capital, temporary needs, lines of credit and long-term assets. These loans can be applied in circumstances and for purposes for which banks may not lend and are typically approved within 24 hours.

Another, the Temporary Loan Program, provides loans to businesses and nonprofits of between $100,000 and $2 million with a three-year term and flexible amortization schedule with no minimum collateral requirement, but a demonstrated capacity to repay the borrowing.

The BFA was established by the Legislature in 1992, when depressed real estate markets triggered a recession leading to a credit crunch and bank failures. Since then the agency has provided $96 million in direct financing, guaranteed $248 million in loans and served some 5,000 businesses.

Key-Wallace said that apart from its existing programs the agency expects to develop other financial instruments to assist businesses.

“We are here to help all day, every day. We stand ready and have experience,” he said.

In addition, the Community Development Finance Authority has established a Response Fund, funded in part by contributions from the business community, to provide nonprofit organization with grants and loans of up to $100,000 for working capital, equipment purchases and programming expenses.

These stories are being shared by partners in The Granite State News Collaborative. For more information visit collaborativenh.org.