Northwest Credit Union Business Lending Up 11 Percent

Oregon and Washington small-business entrepreneurs are turning to credit unions for their financing more than ever before, according to data just released by the National Credit Union Administration (NCUA).

The Northwest’s financial cooperatives have more than $2.3 billion ($810 million in Oregon, $1.5 billion in Washington) in outstanding member business loans (MBL) as of June 31, 2012. This marks a quarter-over-quarter increase of 2 percent in Oregon and 2.8 percent in Washington. Credit unions nationwide experienced a 1.2 percent increase during 2012’s second quarter, according to the NCUA.

Over the past 12 months, Oregon and Washington’s 86 credit unions with business lending programs have infused more than $235 million into the region’s small-business economy, an average year-over-year increase of 11 percent (7.96 percent in Oregon, 13.1 percent in Washington). Nationally, credit unions have more than $40.2 billion lent in total MBLs.

“Credit unions in the Northwest and nationwide are filling an important societal need left when banks began exiting the business lending market after 2008, when business lending at banks reached a peak,” said Northwest Credit Union Association (NWCUA) CEO John Annaloro. “The divergent tracks of the for-profit versus not-for-profit banking sectors in this market in some ways have become less of a balance sheet issue and more of a patriotism issue.”

Small Business Loans per Assets CUs and BanksAccording to a report by the Small Business Administration entitled “The Increasing Importance of Credit Unions in Small Business Lending,” this divergent course in business lending from the two banking sectors has been apparent, although subdued, since the 1980s, when credit unions began devoting increasingly important shares of their assets to MBLs.

Despite the need for more business lending, banks instead are buying U.S. Treasuries and have increased their holding to an all-time high of $1.84 trillion. According to Federal Reserve data, banks have purchased $136.4 billion in T-Bills and government debt so far in 2012—more than double the $62.6 billion purchased in all of 2011.

As banks continue to ignore the business banking market, credit unions continue to work to increase the availability of financing options for small businesses. Credit union business lending is presently limited to 12.25 percent of the lending credit union’s assets, but a bill currently before Congress seeks to raise the MBL cap to 27.5 percent. Senate Majority Leader Harry Reid (D-Nev.) promised in March that the bill would receive a floor vote in the Senate before the end of the year.

According to the Credit Union National Association (CUNA), the passage of that bill alone would inject an additional $13 billion into the small-business economy and create an estimated 140,000 new jobs in the first year—all at no cost to taxpayers.

 

Questions or Concerns? Contact Matt Halvorson, Anthem Editor: mhalvorson@nwcua.org.

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