PORTLAND, Ore. — When the business lending slump was at its peaka few years ago, entrepreneurs who were working with Redwood CreditUnion and Orange County's Credit Union were likely immune to thecollapse.

Both of the California cooperatives saw their business andcommercial real estate lending programs surge during a time whenbanks had closed their capital coffers.

Representatives from the $1.8 billion Redwood in Santa Rosa and the $970 million Orange County's CUbased in Santa Ana shared their ideas for growing loans andportfolio management to a packed room at CU Business Group LLC'sNational Business Services Conference.

Redwood started its program in 2007 mostly through participation loans, said Michael Downey, senior vice presidentof business services. Today, that piece has grown to $27 millioncontributing to the $110 million in business loans now in thecredit union's portfolio.

Annual loan growth has been about $30 million each year, headded. There were about 2,000 business members when Downey cameaboard in 2006. That figure is now well over 5,000.

“We wanted to be a member-focused organization,” Downey said.“We wanted to get the word out we were open for business.”

That plan involved a number of targets, including increasingbranch staff training on products and services, adding commercialreal estate loans in 2007 and earning the Small BusinessAdministration's Preferred Lender designation.

After Redwood approved its first SBA loan in August 2008, Downey said there were newopportunities to aid other small businesses in the North Bay regionthat were being pummeled by losses and bank rejections.

“In 2009, it was not a huge chore in North Bay to become thebiggest business lender because we were the only lender [of thatkind] in the area,” Downey recalled.

The SBA's 504 loan program turned into a huge refinancing toolfor Redwood when the 90% guarantee was temporarily integrated. SBAExpress and 7(a) loans have brought success as well, Downey said.The credit union does $15 million in SBA loans each year.

On the commercial real estate side, Redwood keeps itconservative with a 60% loan to value ratio, Downey said. Lookingahead, CRE refinances through conventional and 504 loans willcontinue to be a growth driver. The SBA is also expected to play ahuge part for the credit union as it continues to compete withentities such as Wells Fargo, Bank of America and community banks.

At Orange County's CU, working with a network of more than adozen, area brokers has helped its CRE program grow to $120million, said Russell Torge, vice president and manager ofcommercial services.

The credit union recently received a waiver that expands itslending authority to $194 million. Torge said CRE financing is theloan portfolio's main objective. While the credit union works withbrokers, it does all the underwriting and has an internal loancommittee.

The average loan amount is $725,000 and its largest loan is $4.2million, Torge said. OCCU concentrates on plain vanilla propertieswithin the single-family, office, industrial and retail spaces.Construction and development loans, receivable financing and otherniche areas are not a high priority because “they're more risky andmore work.”

One of the credit union's biggest drivers is not charging aprepayment penalty, Torge said.

“We get more borrowers that are willing to pay our rates becausethey don't have to pay that prepayment penalty.”

While OCCU competes with Freddie Mac, the SBA, banks andrecently, smaller life insurance companies, Torge said the creditunion has been able to grow its CRE loan program because it doesn'tcharge a litany of fees to borrowers. For instance, no upfront feesare charged until the appraisal is ordered.

The credit union is not a big SBA lender but does offer 504loans, said Patty Jimenez, OCCU assistant vice president ofbusiness services.

Torge said it is very critical to keep its staff up to speedwith ongoing training. A strong proponent of rewarding staffers fortheir efforts, everyone works on salary plus commission that arebased on loan originations.

By keeping an eye on loan mix, OCCU has built a diversifiedportfolio, he offered. Apartments are quite competitive these dayscompared to industrial spaces and the credit union has had to bemore flexible to complete deals.

“It's not uncommon for a borrower to have a net worth of $50million or higher,” Torge said. “But we look more at liquidity. Wemust be comfortable with the borrower before we proceed.”