WASHINGTON (1/20/15)--The Small Business Administration (SBA) and the Credit Union National Association have been working together to help interested credit unions take advantage of the SBA's guaranteed loan programs. Since a meeting last December between CUNA President/CEO Jim Nussle and Deputy General Counsel Mary Dunn, and SBA Administrator Maria Contreras-Sweet, CUNA has been involved in trying to connect credit unions who could benefit from SBA loan programs.
For instance, the SBA's 7(a) loan program can benefit credit unions due to the SBA's guaranteeing from 50% to 90% of the loan. The SBA-guaranteed portion of the loans does not count against a credit union's member business lending (MBL) cap, currently set at 12.25% of a credit union's assets.
CUNA, along with the CUNA Lending Council, has developed an online form to collect information from credit unions interested in participating in SBA programs.
HawaiiUSA FCU of Honolulu, Hawaii started its SBA program in September 2014, and has already seen positive results. The credit unions has placed first in the Hawaii District Lender of the Year for the first two months of the 2014-15 fiscal year, coming in over four banks.
HawaiiUSA FCU, with $1.3 billion in assets and 13 branches, was ranked above American Savings Bank ($5.4 billion in assets, 56 branches), Central Pacific Bank ($4.7 billion in assets, 36 branches), First Hawaiian Bank ($18 billion in assets, 57 branches) and Bank of Hawaii ($14.5 billion in assets, 80 branches).
"We were looking at ways to increase our service to the small business market, since many of them are in a 'sweet spot' where their needs weren't big enough to be met by banks, but with our SBA program, we're a perfect partner," said Gwen Yamamoto-Lau, HawiiUSA's executive vice president and chief lending officer. "The MBL cap-exempt parts of our SBA loans have been a huge benefit to us, because it allows us to reach out even further."
Yamamoto-Lau gave one example of a member who became frustrated with the lengthy small business loan process before HawaiiUSA started its SBA program. The member ended up cancelling the loan application. However, after the SBA program was launched, HawaiiUSA reached out to the business again with the hope of winning it back.
"We set a goal to 'over-deliver' to impress and win back his confidence in our business financing program. We met with him, educated him briefly about the SBA program, promised him that his experience would be different this time, and finally convinced him to reapply," she said, adding that the member was soon approved for a $30,000 express line of credit.