HARRISBURG, Pa. -- Credit unions looking to buy or sell their member business loan participations will soon have access to an exchange to make swaps through Loan Trader, a new online network from the Pennsylvania Credit Union Association.
Loan Trader lists loans available for purchase by industry type, type and location of collateral, and other critical factors, according to the association. Buyers may shop for participation loans fitting their own lending criteria. The exchange, which will go live on Oct. 28, is only available to league-member credit unions and business services CUSOs that operate in the Mid-Atlantic region.
Users are provided with a unique user name and password to the site. Once there, a series of questions are completed about capturing the profile or interests of a credit union. Buyers can then shop for loans by different categories and can also request additional information.
Sellers post their loans in a section where preferences and risk tolerances are listed. They also have the option to deny a request. If the transaction is approved, documents from the credit union are available for to download.
While Loan Trader is sort of a meeting place for participation loan exchanges, just as with online dating, credit unions still must know with whom they are connecting. As a caveat, PCUA issued a reminder that NCUA still requires credit unions considering buying any loan participation to perform their own due diligence, and re-analyze the credit as if they were originating the loan. At the request of any potential buyer, sellers can release the data necessary for completion of this independent analysis.
The idea for the online network came from feedback from member business lending credit unions working with Molly Snody, director of PCUA's business advisory services, on a best practices committee, said Michael Wishnow, senior vice president, communications and marketing. The concept of an automated program was presented to the association's IT staff, which, with input from credit unions, put together a pilot that eventually became Loan Trader.
"The logic behind it is reaching out to those interested in doing member business lending," Wishnow said. "One piece of feedback we've received is there's a comfort level."
A handful of credit unions are helping PCUA's IT team to tweak Loan Trader. Some have asked about the possibility of adding consumer loans to the program. Wishnow said for now, member business loans will be the focus.
"As credit unions become more involved in member business lending, there is a need for credit unions to connect with one another," said Jim McCormack, president/CEO of PCUA. "Some credit unions are bumping up against MBL caps, while others are seeking out quality loan participations. This product brings these parties together."
A free tutorial on Loan Trader is available at www.pcua.coop. Access to the site is also available for an annual subscription fee, which varies for CUSOs and credit unions based on several factors, such as loan volume.