FAIRFIELD, N.J. (2/5/14)--Credit unions in New Jersey last year appear to have expanded their small business loan portfolios faster than the national average, according to a profile of the state industry in New Jersey Business magazine.
New Jersey Credit Union League President Greg Michlig told the publication that NCJUL member credit unions increased small business loans by 0.6% in the third quarter of 2013--growth that was 0.5 percentage points more than the credit union national average.
"At this point, we are really working with our member credit unions as a league to assist with the resources and expertise that are necessary to offer business loans in this environment," he said. Michlig also pointed out that New Jersey's economy isn't performing well compared to other states due, in part, to recent storms that have pummeled the Garden State.
The February edition highlighted the role that credit unions can play in a tight economy. Megan Shull, business development officer at Wall-based First Financial FCU, said that otherwise capable entrepreneurs being shunned by the labor market can use credit union financing to launch their own ventures.
The $185 million-asset credit union recently approved a $170,000 loan to finance a small business owner's property acquisition. A larger bank had previously refused to provide the loan "because the dollar amount of the loan probably wasn't large enough," Shull told New Jersey Business.
But statutory limits are limiting how much credit unions in New Jersey and their counterparts across the United States, can lend to small businesses, as the magazine detailed. Credit Union of New Jersey President Andrew Jaeger said that the federal constraints on small business loans--12.25% of credit unions' total assets--have almost consistently limited the Ewing cooperative's line of commercial credit at around $3 million.
Jaeger, who said that the average business loan made by CUNJ is $200,000, with the typical minimum approved at $10,000, pointed out that credit unions can partner with one another to extend larger amounts of credit to businesses. The $326 million-asset credit union recently lent $9,500 to a doctor's office to help it cover an insurance premium, the article said.
NJCUL's Michlig counseled New Jersey Business readers: "The best advice I could offer small businesses is to make sure you shop around and include a credit union or two in the mix when looking for that loan or business service."
The Credit Union National Association is currently urging Congress to allow credit unions to play a larger role in small business financing through member business loans (MBLs). CUNA says that raising the federal government-mandated ceiling on MBLs as a percentage of total assets to 27.5% would inject $13 billion into the economy, and help boost employment by 140,000 at no cost to taxpayers. CUNA and credit unions are calling on Congress and the administration to support the Credit Union Small Business Jobs Creation Act (H.R. 688), which would increase the MBL cap to 27.5% of assets.