CU member biz loan growth garners press attention

October 22, 2015

MADISON, Wis. (10/22/15)--Credit unions in New Jersey and Ohio are targeting member business lending (MBL) as an area of growth for 2016, said articles in (Oct. 19) and Columbus Business First (Oct. 20).

And in an op-ed in Providence Business News (Oct. 17), statistics about credit unions’ business lending during the nation’s financial crisis were used to counter Rhode Island bank attacks against credit unions expanding their MBL cap to 27.5% of assets from the current 12.25%.

In New Jersey, a strategic partnership between the U.S. Small Business Administration (SBA) and the National Credit Union Administration to increase the cap is paying off, said Credit unions’ SBA lending has increased 37% since 2014.

Credit unions are an untapped market, and the SBA wants to do more with them in the state, Harry Menta, SBA New Jersey division spokesman, told the publication.

The article highlighted the MBL programs of several credit unions, including North Jersey FCU, Totowa, and Affinity FCU, Basking Ridge.

North Jersey FCU has offered commercial business loans for years but sees SBA loans as an opportunity to serve more members and improve its revenue, said Richard Garcia, vice president of real estate and commercial business lending, in

SBA loans help Affinity FCU with collateral requirements from regulators and allow more flexibility, with longer financing terms, which gives the business borrower lower payments each month and helps with day-to-day cash flow, said Kathleen Metz, vice president of business lending at Affinity FCU.

In Ohio, credit unions loaned 49% more to businesses during the first six months of 2015 than in the same period in 2014, said Columbus Business First. At mid-year, the state’s 317 credit unions originated $111 million in business loans, up from $74 million a year earlier. The loans averaged $116,036.

In the article, the Ohio Credit Union League said the increase proves credit unions are addressing the state’s growing small-business sector and they should be given the opportunity to expand the MBL cap.

The league also attributed MBL growth to its shared-risk lending program, Cooperative Business Services LLC, a Cincinnati-based cooperative owned by eight credit unions and the league. It allows multiple credit unions to work together and share the risk.

In Rhode Island, an op-ed written by Paul Gentile, president/CEO of the Cooperative Credit Union Association, responded to a banker’s opposition to raising credit unions’ MBL cap. He used several statistics to make the case that credit unions should be allowed to expand their business lending.

Noting credit unions are filling an important void in the small-business lending market because banks focus on large commercial business loans, Gentile wrote that in Rhode Island, the average credit union MBL is $225,000 while the national average is $205,000.

He cited a U.S. SBA study that indicated credit unions increased their business lending 45% during the nation’s financial crisis from 2007 to 2010, while banks decreased their lending by 15%. “Credit unions were there in the tough times,” he concluded.

Two bills seeking to increase credit unions’ MBL cap to 27.5% have been introduced in Congress: the Small Business Lending Enhancement Act of 2015 (S. 2028) and the Credit Union Small Business Jobs Creation Act (H.R. 1188).