Member Business Lending Growth This Year Despite Hike Stall
The fight to increase the current 12.25% member business lending cap has been a long and arduous one.
Meanwhile, in the thick of it all, credit unions continued to grow their business loan programs this year and the industry is expected to follow suit in 2013.
According to Callahan and Associates, 65.3% of credit unions with more than $50 million in assets offered MBLs, as of April. The amount of outstanding MBLs was $33.8 million with $200,814 being the average balance.
While a $1.8 billion (4.4%) gain in MBLs also contributed to improving loan portfolio growth, this source of growth and net interest margin is losing steam as many credit unions approach their MBL caps.
In 2012, credit unions started competing with a number of new players on the business lending front including Amazon and Costco. Industry experts don’t expect this trend to let up in 2013, particularly among firms that are offering more micro loans, a niche product seen at many credit unions.
A number of credit unions beefed up their loan participation programs this year; among them the $50 million Navy Federal Credit Union in Vienna, Va., which announced a lending collaboration effort with other cooperatives. Several CUSOs reported record with their credit union owners and partners.
Given the ongoing push to grow loans, 2013 is expected to be another year for the industry to form more collaborations, tap into undiscovered small business sectors and round out their programs to include offerings such a remote-deposit capture and mobile banking.
Cash mobs, which grew in popularity this year to help support local small businesses, caught on big with credit unions and CUSOs. With many of them either hosting or participating in the effort, the linkage could help get the word out more in the community that credit unions are an alternative to banks when it comes to small business capital needs.