Credit Union Journal asked lenders and consultants to identify the “low-hanging fruit” in the new Member Business Lending rule, meaning opportunities that could be taken advantage of quickly and easily. Here are some of the best responses:
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Joel Pruis, senior director for Cornerstone Advisors, Scottsdale, Ariz.
The unsecured lending limits present a great low-hanging-fruit opportunity for credit unions. They now have a great opportunity to get into true small business lending and be much more competitive in the space.
Ron Felder, EVP and chief lending officer at Redwood Credit Union, Santa Rosa, Calif.
For credit unions that were afraid to do some types of lending because of the waiver requirements with NCUA, and probably prevented them from doing the deal, removing some of that process and red tape is opening up an opportunity.
Joe Karlin, senior consultant for Rochdale Paragon, Overland Park, Kan.
The new rule gives greater flexibility related to state and federal guaranteed loan programs. Credit unions can mirror what those programs provide instead of being restricted. Overall, credit unions can be more flexible as long as they are being prudent and customary.
Pat Blaine, VP of loan administration at OneAZ Credit Union in Phoenix
Removing the regulatory requirement for loan-to-value ratio gives us flexibility, as does removing the requirement for a personal guarantee. We require guarantees, but taking the 50.1 percent owner guarantee rule out gives us flexibility and greater autonomy. Also, there is greater flexibility with SBA lending, USDA lending or other federal and state guarantee programs. You are not going to do something that is not good for the credit union, but it does allow you to be more creative so we are excited about it.
Brandon Riechers, EVP and chief lending officer at Royal Credit union in Eau Claire, Wis.,
Our fastest growing segment is loans for less than $300,000. For many credit unions, member business loans are less than $1 million. The new rules should open up opportunities for smaller loans, including participations.
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