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W W W. M A I N E B I Z . B I Z 27 N OV E M B E R 3 0 , 2 0 2 0 F O C U S B A N K I N G / F I N A N C E / I N S U R A N C E From that $40 million reserve and in response to the struggles busi- nesses were facing as a result of the pandemic, FAME set aside $5 million to bolster its direct loan program. rough the COVID-19-enhanced direct loan program, FAME origi- nated eight times more loans than it did during the same period in 2019, giving loans to 79 businesses and using $3.2 million of the $5 mil- lion allocation. From April through June, the program provided payment deferrals to 36% of its borrowers in its direct loan portfolio. FAME steered another $10 million from the reserve toward buttressing its commercial loan insurance pro- gram, using $1.1 million so far (a figure that represents existing exposure that FAME has approved, and could end up paying out in insurance claims at some point in the future). e COVID-19-enhanced commer- cial loan insurance program offers cer- tain concessions to borrowers, includ- ing deferrals or interest-only loans from lenders that FAME works with, Cummings says. Some 182 businesses have received loan deferrals through the COVID-19 program. Spread the resources FAME tailored its programs to help as many borrowers as possible without running out of money. "e way we approached it was to limit the amount per borrower, so we could spread our resources among as many businesses as we could," Cummings says of the COVID-19 direct loan program. Most businesses taking advantage of the programs have been in the hos- pitality industry, including lodgings, restaurants and retail, as well as day care centers. e program was so active that FAME hired an additional contract employee to support the effort. Activity slowed considerably when the federal government established the Paycheck Protection Program, which provided business loans that were for- given if certain requirements were met. "Even though our interest rates were low or deferred, it was still a loan," Wagner says. "e feds were really giv- ing out free money, so our activity level dropped. Now we're watching very closely, because unless there's another tranche of federal money, we'll be very active again." With a total of $15 million allo- cated for both programs, about $7 mil- lion remains, most on the commercial loan insurance side. Many unknowns e effort continues. "We're ready for a slew of new requests," says Cummings. e next phase includes helping busi- nesses that obtained one-year loans with six-month interest-only payment periods to navigate the post-six-month period. "at six months is coming up now," says Cummings. FAME is considering an extension to the interest-only pay- ment option, she adds. Also on offer is a 50% loan insurance program to banks that don't already have a relationship with FAME, to help them refinance existing loans with borrowers struggling to make payments. "at takes half the risk off the banks and credit unions, which will allow them to help more businesses and leverage their dollars further," says Cummings. "We're tailoring that to our existing pro- gram and increasing our exposure." Because borrowers have received payment deferrals and are therefore not defaulting on their loans, FAME's reserve has held out. "But that could change," says Wagner. "is situation remains unpre- dictable as it continues, and we could be under strain at some point." If FAME exhausts its reserve, it could return to the state government to see if there's any money available, he added. "ere's a lot of uncertainty for us," Wagner says. Planning continues for the future. "If we get another surge in demand, and if the feds don't have another tranche of money, we're gearing up to do more loan applications online, so they're automatic and so the process goes very quickly, for loan guarantees in particu- lar," says Wagner. "We had to hire an individual to meet demand during the first cycle and we're trying to bulk up within existing resources for now to get ready for a second one." Says Cummings, "For us, there are so many unknowns. Some businesses have fared better than others. ose that are still hanging on hopefully have the means and the resources to allow them to con- tinue operations through the remaining uncertainty. We're trying to be there to support them as best we're able." Laurie Schreiber, Mainebiz senior writer, can be reached at lschreiber @ mainebiz.biz Visit Patrons.com to find an independent Maine agent near you. Business Property and Liability Insurance Products Cyber and Data Breach Liability Insurance Employment Practices Liability Insurance, EPLI & Equipment and Mechanical Breakdown I N S U R I N G M A I N E B U S I N E S S — I N S U R I N G M A I N E P E O P L E Innovative solutions for today's business challenges. We've been in business more than 140 years, and continue to innovate by providing you a portfolio that offers the kind of protection your business needs — today. Join our Community of Investment Partners Photo credit: Habitat for Humanity of Greater Portland How to Invest Choose an Amount to Invest $1,000 minimum Choose an Investment Length 1 year minimum Choose an Interest Rate Individuals: 0%–3.5% Institutions: 0%–2.0% F O R M O R E I N F O R M A T I O N : Visit tinyurl.com/gen-invest or call us at (207) 844-2035 The Genesis Fund is a Certified Community Development Financial Institution. Earn a financial return of up to 3.5% by investing in local community development projects. affordable housing food banks health clinics youth & childcare centers recovery residences eldercare facilities There's a lot of uncertainty for us. — Bruce Wagner CEO

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