Credit program rolled back up
When Ulster County Executive Michael Hein suggested local banks create a lending consortium for business owners to get needed capital, the “Credit for Success” program was hailed as a jumpstart for a tattered economy.
Rolled out in 2009, a group of banks in Ulster each pooled $50,000 into the loan fund, encouraging business owners who had been turned down for a loan to reapply through the “Credit for Success” program, which would give loans but share the risk equally.
Within a few months, U.S. Sen. Charles Schumer hailed the program as so significant it would be rolled out to every county in the state, creating an opportunity to get needed funds for small-business owners for new equipment or upgrades to an existing business.
One caveat, however, seems to have trumped the much-hailed program: “Because anyone applying needed a Small Business Administration guarantee,” said Michael Shaughnessy, Ulster Savings Bank”™s interim president and CEO, “when people came in who qualified for the SBA loan, which guarantees loans for 90 percent, it didn”™t make sense to ask the business to apply for the ”˜Credit for Success”™ program, since they”™d already been approved by the SBA.”
Shaughnessy, who is interim president while the bank looks for a replacement for Marge Rovereto, who resigned in mid-March, said the positive about the program was the attention it got local banks.
“It was good publicity for us and other banks for people to know we were  willing to lend money … many people who had been turned down by for a conventional loan did inquire about the “Credit for Success” program, but because they needed an SBA guarantee, it made more sense for banks to work with the SBA than to work through the CFS program. As a result, very little business was actually done,” Shaughnessy said. “The flaw in the program was if someone was approved by the SBA to get a loan, and banks work with SBA loans, it was more beneficial for the bank to work with the SBA because they guarantee the loan up to 90 percent of the value, whereas the CFS program had a smaller guarantee if the loan failed.”
Hein did return a call for comment.
Shaughnessy, who was senior vice president under Rovereto at Ulster”™s Kingston headquarters, said the popular banker, who announced her resignation from the bank she started her career in back in 1983, was “sad for all of us. We all love Marge and she did a great job, but she had personal reasons for leaving, and we wish her the best.” Now, it will be up to the bank”™s board of directors to find a permanent replacement for Ulster Savings”™ first woman president.