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Mich. GAC panel Right time to step up biz lending
LANSING, Mich. (5/3/11)--The slow market for business credit presents an opportunity for credit unions to offer member business lending, according to panelists speaking on “Economic Development Initiatives for a Stronger Michigan” at the Michigan Credit Union League’s Governmental Affairs Conference, April 26-27 (Michigan Monitor May 2).
Bill Beardsley, right, moderator of “Economic Development Initiatives” at the Michigan Credit Union League’s Governmental Affairs Conference, introduces panelists, from left, Eric Hanna, Michigan Economic Development Corp.; Tom Donaldson of the Small Business and Technology Development Center; and Al Cook of the U.S. Small Business Administration’s Detroit office. (Photo provided by Michigan Credit Union League)
Big banks may not begin lending again for two or three years, said Eric Hanna, capital markets development associate for the Michigan Economic Development Corp. “There’s a tremendous opportunity for credit unions to step into the breach,” Hanna said, but he added the window could be short because when banks do start lending, they will aggressively pursue volume. The shift toward lending by smaller lenders has already taken place, according to Al Cook, deputy district director for the U.S. Small Business Administration's (SBA) Detroit office. Cook said that even though the SBA has raised the cap on small business loans to $5 million, most of the loans it does still fall under the old $2 million cap. “The shift I’ve seen is from big lenders to small lenders,” Cook said. He added that the SBA prefers to work with lenders who know the local market. Credit union leaders should make sure proposed deals fit within their business model, said Tom Donaldson, regional director for the Small Business and Technology Development Center. “Ultimately, we want to refer deals that you want to do,” Donaldson said. Credit unions seem ready to fill the business credit void in their local communities, according to Bill Beardsley, moderator of the panel and president of the Michigan Business Connection. “I’m excited about working with a group of credit unions because they really put their money where their mission is,” Beardsley said. The Credit Union National Association (CUNA) has estimated that the MBL cap lift could provide up to $13 billion to small businesses in the first year alone and create over 140,000 new jobs, at no cost to taxpayers.

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