WASHINGTON -- As recently as this February, CUNA President/CEO Dan Mica said one way to increase the number of credit union lenders in the Small Business Administration's loan programs is to continue efforts to process applications faster.
Steven Preston, who became SBA administrator in July 2006, recently left the agency to head up the Department of Housing and Urban Development. At press time, President Bush had nominated Sandy Baruah as Preston's successor. Baruah has served as assistant secretary of the Economic Development Administration at the Department of Commerce for the past two and a half years. Confirmation is scheduled to come from the Senate Committee on Small Business and Entrepreneurship.
Meanwhile, over his nearly two-year tenure at SBA, Preston carried on one of his predecessor's goals of increasing credit union participation. Since opening up its loan guaranty programs in 2003 to all credit unions regardless of their charter, 410 of them are now lenders. Under Preston's watch, 87 credit unions became SBA lenders, according to the administration. Sixty credit unions signed on through the agency's new Patriot Express program, which provides special loans to active and retired military personnel.
At a February 2008 meeting with Preston, Mica said that despite credit unions accounting for only 1% of SBA 7(a) lending in 2007, strides had been made to provide more capital to small businesses and a streamlined paperwork process.
Nearly a year before in March 2007, House Small Business Committee Chairwoman Nydia Velazquez (D-N.Y.) introduced the Credit Union Small Business Lending Act (H.R. 1849) that would exempt the nonguaranteed portion of SBA's 7(a) loans from counting against credit unions' small-business lending cap. As it stands now, only the guaranteed portion of 7(a) loans does not count against the cap for credit unions. The bill would also create a simplified 7(a) application for credit unions as well as establish a special loan guarantee program for underserved areas.
In a November 2007 op-ed published in Credit Union Times, Preston described SBA and credit unions as "natural partners."
"The SBA is focusing the delivery of our products and services in underserved markets in order to accelerate entrepreneurial development," Preston wrote. "But this is more than a priority for the agency: I believe that empowering change in communities that need it most goes to the very core of the agency's mission. And it is a mission that we share with many credit unions across the country."
In a February 2007 Q&A with Credit Union Times, Preston said the unique groups served by credit unions, including the underserved, were important groups to reach out to.
"We're looking very hard to improve outreach in areas that have high unemployment. That can be in rural areas and inner cities. We want to reach out harder to get those financial institutions involved. If there are opportunities to get capital to those areas then we want to do all we can to help," Preston said.
In one of his last interviews as SBA administrator, Preston highlighted credit unions' growing participation in the agency's programs thanks to technology and operating channel improvements. In a June 23 interview with The Washington Business Journal, he said one of the accomplishments he was most proud of was the number of lenders returning to SBA.
"Banks were leaving our program because their guarantees were not being honored, or it was taking, in some cases, over a year to get them honored," Preston told the publication.
"We're now turning those requests, on average, in 23 days in our flagship program."
Preston said "driving these operational efficiencies, service levels and ease-of-use initiatives forward, banks are beginning to embrace our programs again."
"Not only that, we've got credit unions coming into our programs," he pointed out.