SNL Financial News featured LEVERAGE Business Lending in a recent article titled, “Community banks, credit unions square off for SBA loans.” The article points out that credit unions are new to the Small Business Administration (SBA) loan program with only 374 taking part this year. While credit union SBA lending is on the rise, it still pales in comparison to community banks. LEVERAGE Chief Operating Officer Lisa Burroughs tells SNL that since 2011, the outstanding balances for SBA loans handled by credit unions have more than doubled, which indicate an increased demand for those loans among credit unions. She says that a vast, untapped pool still remains and the SBA is “very interested” in utilizing credit unions to make some of those loans.
SNL Financial talked to Ancin Cooley, principal with Synergy Credit Union Consulting in Chicago, and he said that “recent data also shows that big banks are making fewer loans to small businesses. He said that is largely due to the fact that it often requires the same amount of time and energy to originate a $100,000 loan as it does for a $1 million loan. Another factor is the growing prevalence of online lenders.
“The rub with the alternative online lenders is that their interest rates are extremely high,” Cooley said. “This interesting dynamic creates a prime opportunity for credit unions to increase earnings by growing their member business loan portfolios.”
Cooley goes on to tell SNL that he “believes that credit unions can have a significant impact in the small business lending space. They first need to re-shape the perception that they only offer mortgage and car loans and then expand their risk appetites and realize that much of the risk associated with SBA lending can be mitigated with strong policies and procedures,” he said.
Find out more about LEVERAGE Business Lending by getting in touch with a business development consultant.