"Aside from a few institutions, credit unions are not heavy into small business, so the experience and expertise may not be there in every organization — even if the need is there on the membership side," he said.

PPP is designed to help businesses cover payroll and other expenses during the coronavirus pandemic. The loans can be forgiven in full or in part, depending on how the money is spent and the number of workers the business retains.

Businesses, independent contractors and sole proprietors apply through banks or credit unions approved by the Small Business Administration.

Security Service Federal Credit Union of San Antonio ($9.9 billion in assets, 788,628 members) had 600 members inquiring about the program by its launch on April 3, and has been getting 50 inquiries a day since.

"Unlike any other program we have ever rolled out, everyone wants to apply now," J.T. Cody, Security Service's EVP and general counsel, said.

"Even in a best case scenario, handling a wave of demand like what we are experiencing would be exceptionally difficult," he said. "Add into the equation reduced staffing, working remotely, plus limited and late-breaking program information, bottlenecks are going to be par for the course."

The PPP loans are not the only help credit unions or the government can offer, but they provide the largest potential source of relief to small businesses.

Businesses can apply for loans for up to 2.5 times their average monthly payroll up to $10 million. The amounts spent within eight weeks of origination on payroll, rent, utilities and interest payments on loans will be forgiven.

The amount of loan forgiveness is reduced if there is a reduction in the number of employees or a reduction of greater than 25% in wages paid to employees. The remainder will be converted into a government-backed loan with an interest rate of about 4% with terms up to 10 years.

Because of the need to roll out the program quickly, Security Service relied on familiar tools already at its disposal by taking applications via secured email.

"The process is far more cumbersome than we prefer, but we are taking steps to build in efficiencies as we go and learn from our initial experiences," Cody said.

Security Service's biggest challenge is educating members on the application requirements. They often arrive incomplete or lacking required documents.

Loan funding has been fairly easy. Usually the credit union simply deposits the proceeds into the member's credit union account.

Meanwhile, the SBA continues to roll out details about the program.

"In a perfect world, we would have all of the details and months of lead time to prop up the program," Cody said. "Right now the world is far from perfect, so it is understandably chaotic at times."

The loans are 100% backed by the federal government and credit unions are allowed to charge an application fee, which the SBA pays.

However, Nelms at Filene said the servicing costs are high. Credit unions still need to vet new business members, however minimal. "And they are running ragged, responding to a rapidly evolving crisis situation across the organization with limited resources for any one initiative."

Another challenge for credit unions is identifying members who might benefit. Many are independent contractors using regular services from the retail side of the credit union organization. Others might be retail members who run a sole proprietorship off a Venmo or Cash app account.

Nelms said the PPP is well designed from a policy perspective, recognizing the need to keep small businesses afloat through the crisis with grant-like loans with inclusive qualifications.

"What's happening is not a typical business cycle downturn — more like economic hibernation," he said. "We know that small businesses — and just as importantly, sole proprietorships, the self-employed, independent workers/contractors — operate with super thin margins, and we know that they have a massive role to play in employment throughout the country."

However, Nelms said his biggest concern is that it's first-come, first-served model will leave out those most in need.

"That's exactly what we're hearing from the banking side of things, that they are preferring to work with existing customers," Nelms said. "It would not surprise me in the slightest to see women-owned, minority-owned, independents/gig workers, and other vulnerable entrepreneurs/small businesses disproportionately excluded from the support."

Nelms said the situation provides an opportunity for credit unions to leverage their local connections and "make a difference in their communities."