Bread & Butter: Northwest Credit Unions Spreading Small-Business Financing Around Region
Efforts by Northwest credit unions to increase their member business lending have proven fruitful as the region’s not-for-profit small-business financiers outpace growth by traditional sources.
August 16, 2012
Three years into a concerted effort to increase member business lending (MBL), Northwest credit unions have outpaced credit unions’ national growth in small-business financing by 3 percent.
From March 2011 to March 2012, Oregon and Washington credit unions increased the value of business lending by 9 percent to $2.498 billion—$.957 billion in Oregon and $1.54 billion in Washington. Nationally, credit unions increased their member business lending by 6 percent to more than $41 billion in the same 12-month period. This growth has come despite increasing regulatory pressure and attacks by banks demonizing the not-for-profit financial sector’s efforts to lift the cap that currently limits credit unions’ MBL portfolios to 12.25 percent of assets.
With the anticipation rising for the release of 2012’s second-quarter data that will likely show MBLs as the fastest-growing segment of credit union loan portfolios nationally, the industry remains steadfast in pursuing its all-in legislative push to lift the cap from 12.25 to 27.5 percent of assets.
“Northwest credit unions anticipated the increased regional need for business lending in 2009 and stepped up to the regulatory requirements through education and expertise to guarantee that this type of lending is done in a safe and sound manner that is also friendly small-business-owning members,” said Northwest Credit Union Association (NWCUA) CEO John Annaloro. “When Congress finds the courage to bring this issue of lifting the MBL cap to a vote and it passes, Northwest credit unions will be in position to inject capital into a floundering economy whose small-business engine has sputtered at the closed hand of traditional sources of financing.”
During the 12-month period from March 2011 to March 2012, according to the Federal Deposit Insurance Corporation (FDIC), community bank business lending decreased by 4 percent as credit union MBLs rose by 6 percent, highlighting a stark difference in addressing the Great Recession and the need for small-business financing.
According to estimates from the Credit Union National Association (CUNA), removing the cap will produce an additional $14 billion in new MBLs and 154,000 jobs nationwide in the first 12 months. In the Northwest, that amounts to more than $868 million and 9,400 jobs.
The average size of a credit union business loan is in the Northwest is $264,000, although MBLs as small as $5,000 or less are available at the 99 Oregon and Washington credit unions that have MBL programs.
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