ST. LOUIS (9/6/11)--Missouri credit unions are taking to heart the plight of the small business, according to the Missouri Credit Union Association (MCUA), which provided examples of how credit unions stepped in to offer loans when banks and other lenders refused to do so. The results? The businesses are all successful, thanks to the credit unions' input during the loan process. What's more, credit unions making these small business loans have seen their lending portfolios increase. That's significant at a time when the economy has produced the first-ever decline in the nation's credit union loans outstanding, said MCUA in "Missouri Credit Unions Help Small Businesses Succeed," in the Missouri Courier
(Winter). Some of the examples provided:
* CommunityAmerica's CU in Kansas City provided a loan to Emily Brown for her bridal shop, Emily Hart Bridal. Brown had been turned down by two banks for a loan, but CommunityAmerica used Brown's significant dress inventory as collateral for what she needed to relocate her business. "I would have sunk without the credit union," she told MCUA. Today, she has 2,300 square feet and already needs to expand and hire more staff. * Arsenal CU in Arnold approved a loan for Lara and David Mark to
When David and Lara Mark decided to expand their successful David's Guitar Loft, which provides music lessons to students in Missouri, none of the larger banks would risk lending to them. However, Arsenal CU, Arnold, loaned to them, and their second location is meeting its business expectations. (Photo provided by the Missouri Credit Union Association)
expand their business, David's Guitar Loft, which provides music lessons to students from ages six to 70. "We approached bigger banks where we already had accounts and good standing, but none were willing to take a risk on us," said Lara Mark. The second location is on track with its business projections. "It's crucial for credit unions and other financial institutions to help small business," she said. "It might be easier to finance big companies, but you lose the philosophy of small ones that offer a lot more to the communities we serve." * West Community CU in O'Fallon, offered a home equity loan of credit to help Kimberly Saguto turn her catering company into a full-service banquet center. Previously she was turned down by four financial institutions because she didn't have a business track record. She opened the doors in August and has experienced a steady climb in bookings. * Assemblies of God CU, Springfield, provided a loan to Marine Corps veteran Shawn Motlagh so he could buy a Rosati's Pizza franchise. "It's sad that banks don't want to loan money in this economy because small businesses could really help the economy improve," he told MCUA. * American Eagle CU, St. Louis, provided a loan to Dr. John Freund to mark his 20th anniversary in the field by expanding his St. Louis office. His business plan had been repeatedly rejected by other financial institutions and commercial lenders.
Like credit unions in other states, Missouri credit unions are working to support the Small Business Enhancement Act (H.R. 1418 and S 509), which would raise their member business lending cap to 27.5% from 12.25%, so they can offer more business loans at a time when the economy needs it. Raising the lending cap would result in an injection of $13 billion for small business lending and create 140,000 new jobs--without cost to taxpayers, said the Credit Union National Association.