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Report Points to Surge in Credit Union Business Loans

Report Points to Surge in Credit Union Business Loans

Member business loan approvals rose for the first time in a year after a 13-month dry spell, reports Biz2Credit.

Credit union small business loan approvals grew from 44.8% in June of this year to 45.1% in July. “We are beginning to see larger credit unions investing in SBA loans. Possessing the license to carry out SBA loans is a huge advantage that the credit unions have over alternative lenders, and they are starting to promote this aggressively,” said Biz2Credit CEO, Rohit Arora in a statement.

Biz2Credit, an independent commercial credit service also said that big banks have gotten back into the small business loan game, improving to an all time index high of 17.4% in July. From year to year, bank business loan approvals have increased by 50%.

However, smaller banks haven’t faired as well, perhaps suffering due to the return of big bank lending. “Approvals at small banks were down slightly in July, in part, because the big banks — which have better brand recognition and sometimes offer better rates — are cutting into their market share,” Arora said.

Business Owners Are Optimistic About Credit Unions

Last month The Orange County Register talked to a local entrepreneur about how he secured a $150,000 loan to open an upscale convenience store in Fullerton, California. Owner, Roland Foss first reached out to SCORE, a business mentoring service for guidance but got nowhere.

"I reached out to SCORE,” he says. “They hooked me up with some folks from their finance committee, (but) they said, 'good luck finding a loan, it's just not going to happen.'"

Then Foss turned to the Credit Union of Southern California ($700 million, Whittier, CA) where he was approved for a $155,000 SBA-backed loan. “Maybe the lending environment is getting a little bit better," he told The Register. "The fact that someone like me can get that amount of money does say something."

When Josh Bell sought funding for his Michigan-based K Drive Greenhouse, he turned to Omni Community Credit Union ($304 million, Battle Creek, MI) to secure an SBA 504 loan. “They make capital available for people who usually wouldn’t have been able to,” he told the Battle Creek Enquirer. “I definitely couldn’t have gone to a conventional bank and gotten the loan to do this, especially for agriculture in Michigan.”

Mona Shand, public relations manager of marketing and communications for Michigan Credit Union League and Affiliates, commented that credit union member business loans have been instrumental to small business owners during the recession and beyond. “We’re happy we’re here and we’re happy for K Drive Greenhouse,” she said.

Why A Credit Union Should Be Your First Stop

Jim Salmon, vice president of business services at Navy Federal Credit Union ($54 billion, Vienna VA) explains why turning to a credit union is different than the rest.

“We place importance on building relationships with start-up small business owners,” he told Credit Unions Online. “Even if that initial relationship only includes deposit services or merchant card processing, we're there from the beginning. Small business owners respect that personal relationship, and are more likely to come back to us for credit products as they become more successful and look to invest in their business. Knowing their business from the start means we understand their financing needs and are able to provide them with the right lending product.”

Salmon adds that Navy Federal offers small businesses affordable rates and convenient products that work for their business. “We haven't altered our short-term pricing strategies and our rates on vehicle loans, short term equipment loans, SBA loans and credit cards have remained stable throughout 2013. From start-ups to established small businesses, we do what's right for them by offering low rates such as our (as low as) 1.79% on vehicle loans.”

Metro Credit Union ($1 billion, Chelsea, MA) reports robust business loan growth, up 45% year over year. “We are proud to be part of what enables local business investment as well as home ownership in the communities we serve,” Robert M. Cashman, president and CEO said in a release. “Metro Credit Union has been making affordable loans in our own backyard for the past 87 years. We plan to continue our efforts to support the Massachusetts economy by investing in our members for the next 87.”

Vinod Vaidyanath, assistant vice president of business development at Webster First Federal Credit Union ($650 million, Worchester, MA) says that he has seen primarily service-sector start-ups head to his credit union. “I see more people trying to buy commercial investment properties and also commercial buildings,” he tells Adding, that this trend does not mean a return a flood of speculators, which dominated the market up prior to the real estate bubble.

By Gina Ragusa
Published August 19, 2013
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