What Does the CARES Act Mean? 6 Questions for Financial Industry Leaders
In the weeks since the CARES Act passed, Americans in all industries and sectors have been trying to figure out what exactly this new legislation means for them, for their employees, and how it may impact their small businesses.
For leaders in the financial service industry, these first two questions have felt urgent, and the available answers often seem more complicated than helpful. But it doesn’t have to be this way.
Whether you’re still playing catch-up within your financial institution or you’re looking to make sure you haven’t missed an available resource, this article will raise 6 questions to help you find the answers you need.
1: What is the CARES Act?
You’ve seen it mentioned everywhere, but what exactly is it? The CARES Act is a bill passed by the U.S. Senate to help the American economy recover from the impacts of the COVID-19 pandemic.
One of the largest losses we’ve seen have been in the labor market. The April 2020 employment report showed that 20.5 million Americans lost their jobs that month. The CARES Act contains measures intended to help mitigate the financial impacts of these and other losses by implementing practical measures that impact whether people have a roof over their heads, a job to go to next week, and food on their tables.
The CARES Act is a piece of legislation, but it’s a great reminder of how many people are experiencing financial hardship. Your customers and members may have questions about processes they’ve never been through before. Your team needs to be ready to answer them with a humanized message that provides helpful, relevant resources where and when they need them.
2: How can the CARES Act help my financial institution?
The CARES Act provides broad regulatory relief for financial institutions and assurance that the wave of mortgage loan forbearances will be backstopped by federally backed institutions through the Bank Debt Guarantee Program.
It also includes several programs that are specifically designed for specific types of financial institutions:
- Relief for community banks through a temporary reduction of the Community Bank Leverage Ratio.
- Temporary lending limit waivers for national banks.
- Removal of limits on national bank lending to nonbank financial firms.
There are many components to how this legislation may apply to your financial institution, but the general purpose of the CARES Act is to help keep the economy moving by keeping money in the hands of your customers or members.
3: Is the Payroll Protection Program part of the CARES Act?
Yes. The Payroll Protection Program (PPP) is a loan program created by the CARES Act to help businesses that have been impacted by the COVID-19 pandemic continue to employ (and pay) their employees.
It is administered by the Small Business Administration (SBA), which offers excellent information and education geared toward both citizens and financial institutions.
4: How does the CARES Act impact my employees?
In order to provide excellent support to customers or members, you’ll need to have a communications strategy that includes your internal messaging.
Provide your employees with consistent internal messaging about their role in the organization throughout this crisis, what messages they should share, and how they can better support customers or members during this time.
In the office, your customer or member support teams will see an increase in questions from customers or members. To meet these needs, you may need to provide additional employee education on these new government programs.
5: How does the CARES Act impact my customers or members?
In all the talk about PPE, the PPP program, and the SGA, it can be easy to lose sight of what the larger picture is for your customers or members. The CARES Act is intended to provide financial relief for those who are struggling to make ends meet: with this in mind, your team should keep empathy at the forefront as you inform, educate, and engage your customers or members.
This legislation may impact your customers’ or members’ financial lives in a number of ways, depending on their personal financial situation. Whether they qualify for tax rebates or choose to put their credit card debt into forbearance, they’re likely to come to your website or phone lines with questions. How you answer them and the resources you provide may impact their ability to access food, secure housing, and plan for their futures.
Although this legislation came from the government, your financial institution may be the primary resources for customers and members who are looking for answers related to their application or eligibility for specific programs.
To ensure that you’re prepared to meet their needs, you must have the right technology, training, and communications plan to rise to this occasion.
6: How can you help new customers or members during the COVID-19 crisis?
In the initial rush to disperse funds as quickly as possibly, many banks ran out of their PPP loan allocation quickly after the first round was made available. When this happened, many business owners turned to community banks and local credit unions for assistance. If you find yourself leading one of these institutions, you may be seeing an influx of new customers or members.
To help this group and gain their trust, you’ll need to inform, educate, and engage them to ensure that they get the right products and services for their needs.
To help your team support, retain, and grow this group as they return to financial stability, consider creating a new customer or member journey. By sending relevant, humanized messages at a regular cadence, you’ll be able to increase customer or member engagement and boost retention.
Empathetic Communication is Key in a Crisis
Once you’ve assessed the impact of the CARES Act on your financial institution and its customers or members, you need to frame your messages for your audience, as they may be experiencing real hardship day to day. Cultivating their trust during this moment will be critical throughout the months ahead.
Whatever the CARES Act means for your bank, credit union, or lending institution, you must provide consistent internal messaging for employees about their role in the organization, your organization’s communication strategy, and how you plan to provide support for customers or members during this time.