A COVID Program to Assist Smaller Credit Unions That Few Know About

Note:  the numbers initially published of eligible credit unions were updated as of October 7, 2021.

Recently the former NCUA General Counsel Bob Fenner, now in private practice, asked if I was aware of the Employee Retention Credit grants provided under the Cares Act.

I had no knowledge.   He sent me a brief description:

There is a provision in the federal stimulus legislation not well publicized and not well understood that may entitle a credit union to significant federal funds.   

The criteria to qualify are:

  • the credit union averaged fewer than 500 full-time employees in 2019, and
  • the gross income in quarter 4 of 2020 declined by 20% or more when compared to quarter 4 of 2019, or
  • gross income in any quarter of 2021 declined by 20% or more when compared to the same quarter of 2019.

The reason for the decline in gross income does not matter.

The credit union is eligible for up to $7,000 per employee per qualifying quarter in federal funds, in the form of so-called Employee Retention Credits. 

Finally, if your CU has an 80% or more interest in one or more CUSO’s, you must consolidate the books for purposes of determining the number of employees and applying the gross income test.

This IRS official website gives a January 26, 2021 update on the program’s extension into this year.

Estimate of Number of Credit Unions Eligible


Scanning the data for credit unions with fewer than 500 employees in 2019 and declines in total revenue in one of the three applicable quarters (2020-4th, 2021-1st and 2nd) shows the following count:

For test 1 (empl <500 @ 2019, 4Q ’20 income -20%+): 782 CUs

Test 2 (excluding test 1): 350

Test 3  (excluding test 1 & 2): 135

The total of 1,267 includes mostly smaller credit unions.  However the results show that a few credit unions with over $1 billion would also qualify.

This list could be expanded if additional credit unions meet the negative 20% fall in revenue for the third and fourth quarters of 2021 versus the comparable quarter in 2019.

Next Steps

Bob is working with a colleague, Darrell Smith, CEO of Highmark Companies.  He describes their approach as follows:

There is no fee for a consultation and a determination whether a CU qualifies. There is a fee only if a CU qualifies and uses our services to obtain the credits. We don’t talk fees until we do the initial consultation.  

Our services include determining qualifying amounts, preparing the forms to be filed with Treasury, providing a pre-submission audit review from an independent accounting firm, and working with the CU and their payroll provider to submit to IRS.

He continues:  It is a complicated process unless you have studied it carefully and understand it. Sometimes credit unions who have not carefully studied the law and the IRS guidance often conclude either they are not qualified when in fact they are, or they don’t get everything they are entitled to.

Once you understand all the ins and outs of the process, it does not take long to complete the forms. It does however take anywhere from 2 to 10 months to receive the money from the Treasury Department. So while it is definitely good money that qualifying credit unions are legally entitled to, it’s not quick money.

As one example, we recently worked with a with 55 employee credit union that will obtain $1.1 million based on the first three quarters of 2021.  We will assist credit unions of any size.

Resources to Help

Bob’s contact information is  bobf1228@gmail.com and  Darrell Smith at Highmark Companies is dsmith@highmarkcompanies.com.   The only information about their program is what they have sent me.  So as with all contacts, credit unions should always perform their own due diligence, as I am sure Bob in his former General Counsel role would advise.

I am not aware of any other organizations providing credit unions assistance to access this program’s funds.   Bob’s heads up could be a valuable service especially if smaller credit unions who are likely most in need, can be easily qualified.

If readers have other information on this program that would benefit credit unions, I would be glad to offer it in future posts.




3 Replies to “A COVID Program to Assist Smaller Credit Unions That Few Know About”

  1. Earlier this year our PEO which handles our payroll alerted the credit union to the possibility of being eligible for ERTC credits. Like many of the CARES act programs we were rather skeptical about the likelihood of our $50 million credit union being able to benefit. I am very pleased to say we were very wrong, as our credit union has qualified for retroactive ERTC credits for 2020 quarters as well as a couple quarters in 2021. We didn’t understand the difference that program was an either/or which means you could qualify if you had any facility closing OR 20% decline in net income from the same quarter in 2019. Our credits have really helped us manage some of the interest rate compression issues this year and we believe we will be eligible for the remainder of 2021. I would encourage all credit unions to talk with their payroll provider/processor to determine if your credit union could benefit from this program.

  2. Alloya Corporate will be hosting an informational webinar this Thursday October 7th at 2pm eastern time with John Miller and Nicole Preston of Doeren Mayhew.

    This session will provide you with details on the employee retention tax credits (ERC), eligibility criteria, calculation of the credit, how to file for this credit and answer all of your questions.

    The session is free of charge and all are welcome to join. Please visit Alloya’s website to register.


  3. When I first heard about this credit, I assumed it was a federal income tax credit and that we were not eligible. After participating in a webinar with our CPA firm, I learned that this is a FICA tax credit. All credit unions are FICA tax payers, so we are eligible for the credit. If you retained the required percentage of staff through the periods in question, and you had the required decline in revenue, any credit union would be eligible. My opinion is that since we pay FICA tax, and are eligible for the credit, we have a fiduciary duty to apply for it. Calculating eligibility and the proper amount requires selection of the appropriate revenue accounts and payroll information. I would urge credit unions that need assistance in determining eligibility to work with their CPA firm, attorney, and/or payroll processor.

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