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News Now

CU System
Missouri CUs take a closer look at SBA lending
ST. LOUIS (10/26/11)--Credit unions community-focused brand of financial services makes them good candidates for Small Business Administration (SBA) lending programs an SBA district director told News Now following a training session with Missouri credit unions.

Ten representatives from seven St. Louis area credit unions and Heartland Business Services participated in Small Business Administration (SBA) lender training on Oct. 19.

The session took place at the office of U.S. Rep. Russ Carnahan (D-Mo.), who suggested the event during an in-district meeting in August, and was organized with the SBA and the Missouri Credit Union Association (MCUA).

"We were thrilled to see so many credit union loan officers display their interest in starting or expanding small business lending to their entrepreneurial members as this is what drives economic development and the creation of jobs in our communities," Dennis Melton, district director for the Small Business Administration told the MCUA.

"I think part of the reason the SBA is a good fit for credit unions is because some credit union members are small business owners," Melton told News Now.  "Anytime you provide business owners access to capital you are helping economic development in your community, and credit unions are community oriented."

Participants received an overview of loan programs available through the SBA and learned how credit unions can get involved in SBA programs.

SBA does not make direct loans to small businesses. Rather, it sets the guidelines for loans, which are then made by its lending partner, such as credit unions. The SBA guarantees that these loans will be repaid, thereby eliminating some of the risk to the lending partners.

When a member comes in and says he wants to start or expand his business, the SBA program gives the credit union can give the credit union more opportunity to help him out.  The idea is that get lender can dig into credit pool then would have without the SBA, because the SBA offers protection on a portion of exposure".

During the workshop, Mike Nickel from Altra FCU in La Crosse, Wis. shared his credit union's SBA lending experience and best practices.

"With the current legislative challenges credit unions face in increasing the arbitrary limit on credit union business loans, SBA loans can be a vital component in helping credit unions manage the member business lending cap," said Scott Brothers, commercial business development officer for Neighbors CU, St. Louis.

Attendees asked questions and shared successes, concerns and challenges they face while working on SBA loans for members.

Among the credit unions that participated in the event:

  • Alliance CU, Fenton, Mo.;
  • Anheuser-Busch Employees' CU, St. Louis;
  • Arsenal CU, Arnold, Mo.;
  • Electro Savings CU, St. Louis;
  • Gateway Metro FCU, St. Louis;
  • Neighbors CU, St. Louis; and
  • West Community, O'Fallon, Mo.
MCUA said it will work with the SBA to develop follow-up programs.

CUNA and credit unions are urging the U.S. Congress to increase credit unions' MBL cap to 27.5% from the current 12.25%. Doing so would open up more opportunity to offer MBLs, inject $13 billion in loans into the economy and create about 140,000 new jobs, with no cost to taxpayers, according to CUNA.
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