FITCHBURG, Mass.-Workers' Credit Union has been named the number-one new business lender of the year in this state by the U.S. Small Business Administration.
The SBA said Workers Credit Union achieved the highest percentage of loans to new businesses to total SBA loans of any FI in Massachusetts.
The $800-million credit union said it is filling a growing need from members looking to start their own business. During 2011 Workers' made 15 SBA loans and 75% went for new ventures. "There is no way we could have made even half those loans without the SBA guarantee behind them," said CEO Douglas Petersen.
Identifying The Need
Last year was the first full year in which Workers' began offering SBA loans, but it spotted the opportunity and member need in 2010. "A lot of members were coming in asking for loans to start their own business," Petersen explained. "We wanted to meet all of the requests, but loans for a new business are risky."
With WCU's SBA program in full swing in 2011, the number of loans for new businesses more than doubled. "If a credit union is considering getting into the SBA market now, I recommend they do it," said Petersen. "These loans for small businesses are not big-dollar loans, generally in the $50,000 to $60,000 range on lines of credit. They won't make you a ton of money. But they will make good relationships with members who are just getting started on a new career, and hopefully their businesses will grow over the next five years and we will be there for them."
The Price Is Right
Most of Workers' loans to new businesses are priced with APRs in the 6% to 7% range, said Petersen. For established businesses, Workers' CU will price below 5%. The types of new businesses members have been requesting loans for are varied, said Petersen. "We've made a loan to a small CPA firm, a Verizon Wireless store, a landscaping company and a dog grooming shop."
WCU's entire business loan portfolio contains 213 loans for $30.5 million in outstanding balances. Last year it closed 33 business loans for $5.4 million, 15 of which were SBA for a total of a little more than $2 million. The SBA portfolio has no delinquencies.
