Credit Unions New Source for Small Business
NEW YORK -- As banks continue to tighten their loan standards, small-business owners are getting creative in finding financing sources including at credit unions, the Associated Press reported in a May 2 article.
Many are seeking out credit unions, online lending Web sites and other avenues, the article reported. Scott Metzger was turned down by three large banks to finance a restaurant and microbrewery in San Antonio, according to the article. A member of a credit union, he sought financing there and was approved within two weeks.
The article cited CUNA data that revealed business loans grew 20% in the second half of 2007 compared to the same period for 2006. Business loans totaled $28 billion in 2007 with the average size at $181,000.
Online lending outlets such as Prosper.com, Zopa Inc., GlobeFunder Ventures Inc., Virgin Money USA and Lending Club have also caught the eye of small-business owners, the article reported. This, as the Small Business Administration's main loan program gave out 17.6% fewer loans by early April than in the same period last year, according to the publication.
A handful of credit unions are involved in Zopa.
Commercial banks are increasingly referring business owners to asset-based lenders, which float loans against incoming sales receipts and factoring companies that buy up a company's incoming revenue for a fee and give the owner capital up front, the article reported.