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CU System
IWash. PostI Biz loans scarce CUs an alternative
WASHINGTON (8/14/12)--Small-business loans have been hard to obtain from traditional banks since the credit crisis started three-and-a-half years ago, but credit unions are among the alternatives for financing, according to an Aug. 1 article in The Washington Post.

About nine out of 10 small-business loan applications are typically rejected at large banks, according to Biz2Credit. Also, the total number of bank loans to small businesses has declined 17% since September 2011, according to research at Pepperdine University.

The main reason big banks aren't lending is because they haven't completely bounced back from the 2008 financial crisis, and many were saved from closure by the Troubled Asset Relief Program, the Post said. Several of those banks still have exposure to troubled U.S. mortgages, and high-risk investments in Europe, preventing them from accepting new lending risks, the Post added. 

Credit unions and Small Business Administration (SBA) loans were listed by the Post as the first alternative for small businesses turned down by large banks. Credit union loan approvals have slightly risen, compared with those of their banking counterparts, the Post said, citing BizRate.com

The Credit Union National Association (CUNA) and credit unions are urging Congress to increase credit unions' MBL cap to 27.5% of assets from 12.25%. Doing so would open up more opportunity to offer MBLs, inject $13 billion in business loans into the economy and create as many as 140,000 new jobs, with no cost to taxpayers, CUNA said.

To read the article, use the link.
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