Connecticut bank halts small-dollar loan program due to high demand
A Connecticut community bank has halted its small-dollar emergency loan program a week after launching it, as consumer demand fast outstripped the pool of money it set aside for the loans.
Liberty Bank in Middletown, Conn., had allocated $5 million to make unsecured personal loans of up to $5,000 to customers who had lost income due to the economic fallout from the coronavirus outbreak
The $5.9 billion-asset bank began accepting applications for the loans, which are interest-free and deferred for up to six months after closing, on Monday. By Friday, Liberty said it had added another $2 million to the program to satisfy demand through the end of day, and then will stop accepting applications.
“While we would have liked to continue to make this temporary loan relief measure available to customers, given the current environment, it was not feasible as the incredible demand far exceeded the capacity of this program,” President and CEO David Glidden said in a press release.
The bank initially announced the program on March 23. It said Friday that it had received over 500 new applications on the first day the program became effective and a total of 1,117 requests from existing customers over eight business days.
Liberty’s small-dollar emergency loan program is one of numerous low- or no-interest credit products banks have offered to people struggling financially because of the pandemic. Many banks have also waived overdraft and ATM fees and offered mortgage and small-business borrowers 90-day deferrals on loan payments.
Liberty said it would continue to offer various other customer relief efforts, including loan payment deferrals and certain types of fee waivers.
“The great news is we were able to provide financial relief for many customers over a very short period of time and we will continue to work closely with them in other ways that are still available to our customers,” Glidden said.