While banks are still needed to help bolster the economy, in the meantime, credit unions have much to offer the small business sector, wrote David Adams, president/CEO of the Michigan Credit Union League, in a Sept. 8 op-ed.
Adams was writing in the context of helping small businesses and advocating for an increase in the member business lending cap from 12.25% to 27.5% of assets, according to an op-ed on freep.com. He called on Congress to pass legislation that would make the new cap possible.
"We all hope that banks return to full strength soon because our economy needs a strong banking sector. In the meantime, credit unions offer a viable alternative for small businesses," Adams wrote. "It has been particularly tough to get loans. But credit unions are in a unique position to make loans to help small businesses turn things around."
Michigan banks have had to shrink their balance sheets in order to get stronger for the future, Adams wrote. Credit union small business loans were up 18% in 2009 while banks' commercial and industrial loans fell by 68%, according to the FDIC. Adams also cited the Credit Union Small Business Financing Alliance, a partnership with several Michigan state agencies to further improve financing. So far, 30 CUs have volunteered $43 million in small business loan financing, he said.
"Building a new, vibrant Michigan will take cooperation from public and private sectors, but the most important factor is small business growth," Adams wrote. "Credit unions can't meet all the business borrowing needs of our economy, but we can be an important resource, especially for the small business community."