CUNA meets with SBA administrator on expanding CU participation

December 4, 2014

WASHINGTON (12/5/14)--Credit Union National Association President/CEO Jim Nussle sat down with U.S. Small Business Administration (SBA) Administrator Maria Contreras-Sweet Thursday to discuss ways CUNA can partner with the SBA to help more credit unions and small businesses make use of SBA lending programs, particularly the 7(a) guaranteed loan program.   

Contreras-Sweet has noted her support of credit union and community bank participation in SBA lending and CUNA staff said the meeting dialogue was  very productive.  

SBA loans can be an important lending tool for credit unions, since the portions of the loan guaranteed by the SBA, usually from 50% to 90%, do not count against a credit union's member business lending cap.

SBA loans at credit unions have grown in both the average size and total dollar amount by nearly 50% over the past two and a half years. Average loans have risen to $147,000 (up from $101,000) and the outstanding dollar amount has risen to nearly $1.2 billion from around $800 million.

While these number represent an increase, they are still below the average credit union member business loans, which average $225,000 per loan and have an outstanding dollar amount at $48.8 billion.

Under Contreras-Sweet's leadership, the SBA has focused on simplifying its loan processes so more credit unions can access the agency's guaranteed loan products. These efforts have included streamlining the SBA 7(a) loan guarantee process and making credit scores part of the review and documentation process for term loans of $350,000 or less.

CUNA will be following up it meeting by helping connect interested credit unions with the SBA and to look for ways that current SBA lending credit unions may be able to expand their programs.  Ann Marie Mehlum, SBA Associate Administrator of Capital Access and Isabella Casillas Guzman, Senior Advisor, Office of the Administrator, also participated along with CUNA's Deputy General Counsel Mary Dunn. CUNA also supports NCUA's efforts to increase awareness regarding the advantages of SBA lending and facilitate credit union participation.  

Black Hills FCU of Rapid City, S.D., with $995 million in assets, is a credit union that has had an SBA program in place for more than 10 years. Kevin Tildes, assistant vice president of business lending at Black Hills, told News Now he would highly recommend it to any credit union considering a business lending program.

"If you're starting a business lending program, the first thing I would recommend is look into an SBA lending program. Business lending is a huge risk, and the SBA program minimizes that," he said. "We've had success, for example, using SBA loans to serve startups.

"A startup business isn't going to have much equity, and has plenty of other expenses to deal with, so when we can get the SBA to guarantee a portion of the loan, it means they can get a better start by putting put less money down. And if the business succeeds, we've already got the foundation for a good relationship, we've shown that we can meet their lending needs and as they expand and our lending potential goes up."

At the beginning of 2015, the SBA is expected to institute a web-based application and loan management process, called SBA One. The platform is meant to be interactive and user-friendly while allowing automated document uploads, generation of forms for 7(a) loans and electronic signatures.

According to the agency, SBA One is intended to eliminate factors that have been historically troublesome to some lenders.