Between 1986 and 2010, credit unions may have provided extra business loans in response to a reduction in activity from banks.

In a new report, “The Growing Impact of Credit Unions on Small Business Lending,” data from the U.S. Small Business Administration's Office of Advocacy looked at how much business lending at credit unions responded to an increase in business lending at banks and the effects of changes in bank business lending on business lending by credit unions.

While credit unions did partly offset changes in business lending by banks, the report's findings showed that these effects had not been consistent over time for the period tracked.

“To the extent that increased credit union supply of business credit has and will offset reductions in bank loan supply, credit unions can help small businesses and reduce the cyclicality of their local economies,” the report read.

Looking at annual state level data and national aggregate data, the report revealed some differences between the two.

At the national level, the estimates show that credit unions changed their business lending in the same direction banks did; that is, when banks increased or decreased their business lending, credit unions did the same, according to the study.

At the state level, credit union business lending served as a partial offset to changes in bank business lending meaning, as banks reduced their business lending, firms found that they could obtain loans from credit unions.

For the period tracked, certain regions of the country experienced stronger credit union offsets to bank business lending such as in the South and Midwest. In the North and West regions, rather than offsetting bank lending, credit union business lending may have accentuated shocks to bank business lending.

While credit union offset declines were seen in the 2000-2002 and 2008-2009 recessions, that was not the case during the 1990-1991 recession, according to the report.

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SBA Report Shows How CUs Filled in for Bank Lending Gap

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