MADISON, Wis. (4/10/12)--More small businesses are letting media know how credit unions have helped them through a tight credit market.
Their support comes at a time when credit unions, leagues and the Credit Union National Association (CUNA) are pushing for Congress to raise credit unions' member business lending (MBL) cap to 27.5% of assets from 12.25% so credit unions can help more small businesses and the economy.
In a letter to the editor of The Columbus Dispatch
(April 7), Ohio Credit Union League President Paul Mercer wrote that the Credit Union Small Business and Jobs Bill (Senate Bill 2231) would help generate up to $275 million in new credit available to Ohio small businesses and more than 3,000 new jobs.
"Since the beginning of the economic decline, when many banks began limiting access to credit, Ohio credit unions saw demand soar, increasing outstanding business loans by 98.5% from December 2007 to December 2011," Mercer wrote. During the past 12 months, loans to businesses by Ohio credit unions grew 24% to $430 million. Roughly 57% of small business owners who sought financing from banks were turned down, he wrote, citing statistics from Pepperdine University.
Also during the weekend, small businesses in Iowa and North Carolina were speaking up on behalf of raising the MBL cap.
In the Winston-Salem (N.C.) Journal
(April 8), Jim Dobbins, owner of a 23-year-old construction company, Sharp Interiors Inc., told of his quest for a six-figure loan. A slowdown in demand and customer payments had left the company struggling in late 2010 and its existence--as well as 32 jobs--were in jeopardy. The company was sick but knew that it could weather the storm with a loan, he told the Journal
Dobbins' request was turned down by seven large and community banks. Some banks said their hands were tied because of increased regulations after they had accepted Troubled Asset Relief Program money from the U.S. Treasury. Instead of lending to small businesses, they were bolstering their own capital levels, said the article.
Other banks were unwilling to risk a loan for a small business without stellar credit, said Dobbins. He eventually got a loan from Allegacy FCU in Winston-Salem after three months of due diligence and uncertainty, said the article. "Allegacy stood up when no other financial institution would," Dobbins told the paper. "I had gotten to the point of literally having no other option available to me."
The loan enabled Sharp Interiors to not only survive but also more than double its work force in the past 18 months to 70 employees. It did $10 million in business last year, and expects a10% increase this year.
Others who spoke up on behalf of credit unions:
Robert and Faith Newton, Bloomfield, Iowa, who wrote in a letter to The Ottumwa Courier that three years ago their company, Troy Elevator Inc.," needed long-term financing due to several factors, some of which were beyond our control. We applied for financing at a number of banks but were turned away for various reasons." Community 1st CU "came to our rescue and provided us a guaranteed loan through the RSDA Rural Development Loan Program. Thanks to our credit union, we were able to keep our business in operation and keep our 40 employees working. Unfortunately, Community 1st--and many other Iowa credit unions--may not be able to make a loan to the next business owner in need due to an arbitrary cap on the amount of business loans they can make."
John Stewart of Centerville, Iowa, who got a small business loan to buy his place of employment, Centerville Body Shop, when the owner retired. "I looked at different financing options and found that Community 1st really wanted to help me." The credit union "looked at every option that was available to find the best avenue for me so I could buy my small business," he wrote in a letter to the editor of the Daily Iowegian.
Shirley Hendrickson, Iowa City, who told the Iowa City Press-Citizen that a credit union helped her purchase a bed and breakfast seven years ago. Today many are constrained by the cap, she noted.
The Iowa Credit Union League also noted it is airing tv ads in support of raising the MBL lending cap. Use the link to the ad on youtube.