Michael Hearne, a board member with Lafayette FCU in Maryland who also spent seven years working in SBA's Office of The CFO, was CUNA's representative last week at a roundtable discussion sponsored by the Senate Committee on Small Business and its chairwoman, Sen. Olympia J. Snowe (R-ME). In addition to participating in the discussion, Hearne submited a written statement in which he expressed credit unions' strong interest in working with the SBA.
Hearne, who remains a consultant to SBA lenders and does loan portfolio analysis, pointed to CUNA's new alliance with Newtek Small Business Finance, Inc. as one indication of credit unions' desire to work with the small business community.
"Quite frankly, most credit unions do not make business loans, for a variety of reasons," noted Hearne, who added that approximately 1,500 credit unions make business loans. "However, CUNA believes this situation is changing as a result of several factors. Small businesses need a source of funding for loans that are around $100,000 or even less. While the need for such loans is growing, the demand for traditional lending vehicles at credit unions, such as auto loans, other consumer loans, and mortgage loans, is on the decline."
Hearne told the committee that there are still obstacles that thwart SBA and member business lending at credit unions, including the 12.25% statutory limit on member business lending, and CUNA's view that SBA lending 7(a) lending at credit unions would be enhanced if the loan participation process were streamlined. "Some credit unions have expressed concern about the processing of their 7(a) applications," he said. "We believe the SBA is aware of these concerns and taking steps to approve eligible applications in a timely manner."