If it’s all about location, location, location when opening abusiness, credit unions may want to pay attention to several citiesin Florida, California and Texas.

According to Biz2Credit, a New York firm that connects lenderswith small businesses for financing, the top 10 metro areas withthe highest loan application growth in 2011 and 2012 were Houston,Tampa-St. Petersburg, Denver, Seattle, Dallas-Fort Worth, Orlando,Atlanta, Charlotte, St. Louis and San Francisco-Oakland.

Couple that growth with regional and community banks returningto the small business marketplace to aggressively court entrepreneurs,and credit unions may have to go above and beyond to staycompetitive in the game.

Since the Great Recession, credit unions welcomed in ­businessowners turned away by banks, often severing relationships thatlasted for decades. The stories ran the gamut from bankers’ denialsfor extended lines of credit to refinancing. For some of thesesmall businesses, it was the first time they ever heard aboutcredit unions and the small business financing they canprovide.

Now that the economy has started to turn, fickleness may be oneof the dangers credit unions might have to deal with.

Banks such as Capital One, Bank of America and Wells Fargo areback, touting lower interest rates and prime terms to woo smallbusinesses, said Frank Amantia, president/CEO of Mid-AtlanticFinancial Partners LLC, a business lending CUSO, that is asubsidiary of the $286 million Mid-Atlantic Federal Credit Union in Germantown, Md.

Over the past decade, the CUSO has facilitated more than$150 million in commercial and business loans, Amantia said.It currently services more than $80 million for its creditunion clients. Mid-Atlantic Financial is owned by four creditunions and has affiliate or transactional relationship with 15credit unions.

“Terms are being offered that most credit unions can’t competewith,” Amantia said. “It wasn’t that many years ago that creditunions couldn’t find deposits to save their lives. The money wasgoing to banks. Then when the ­economic downturn took place, therewas a flight to safety. Banks were in distress and credit unionswere the safe haven.”

Now, Amantia is concerned that complacency may have set in. Somecredit unions may have assumed once they established a relationshipwith a borrower for loans, the alliance would be sustainable.

“What they’re finding out is some of these were merelyrelationships of opportunity,” Amantia noticed.

At Mid-Atlantic Financial, some credit unions are saying thereisn’t a shortage of borrowers because there are now more players inthe small business marketplace.

If Biz2Credit’s data is any indication, it appears thatgeography has certainly played a part in where banks and otherlenders are targeting their efforts.

“We expected cities such as New York City, Boston andPhiladelphia, which both have well deserved reputations forbusiness innovation, to be atop the list,” said Rohit Arora,president of ­Biz2Credit.“However, the costs of doing business are much greater in bigcities along the East Coast. In other sections of the country, thecost of living is much cheaper.”

Small businesses in Houston, for instance, had the highestaverage number of employees at 7.1, according to Biz2Credit. Arorasaid this is significant because smaller companies have created thelion’s share of new jobs during the past decade. Another trend isthe arrival of large numbers of Latinos and South Asian immigrants,who are ­starting ­companies in metropolitan areas in all sectionsof the country, ­including cities in southern ­California, Texasand Florida.

The $763 million Charter Oak Federal Credit Union in Groton, Conn., revamped itbusiness lending program in 2009. Last summer, it provided a uniquemultiyear financing package for a shipyard that allows the facilityto refinance its existing mortgage as well as fund futureimprovements at the 6.5-acre marina in Mystic, Conn. In April, ithired a 30-year bank industry veteran as its new vice president ofbusiness lending.

“Our biggest issue going forward is the arbitrary MBL cap, notour competitors,” said Brian Orenstein, president/CEO of CharterOak. Still, competition is on his mind.

“We rebuilt our business lending department back in 2009 toensure we can compete with banks in the local business lendingmarket,” Orenstein said. “We have also developed competitivebusiness deposit products and services that are typically betterfor the member than those of our competitors.”

Unlike consumer lending, commercial and business lending is notcyclical, Amantia explained. There is constant turnover, and loansare always maturing, he added. The problem is when banks, nonbanksand conduits left the scene during the Great Recession, creditunions stepped into fill the void, convinced they were thelong-term answer.

If credit unions want to retain those small business memberrelationships established over the past few years, they might wantto rethink how they approach commercial and business lending suchas targeting smaller loans and lines of credit and consideringretail strip centers rather than traditional apartment buildings,Amantia suggested. Borrowers with less than stellar credithistories might get a second, longer look, he noted. Amantiacautioned that he is not talking about helping those withdistressed credit but those with complex credit.

“The crème de la crème–those are the ones that are disappearingfirst,” Amantia said.

Indeed, small businesses in San Francisco, New York, Boston andLos Angeles tended to have higher credit scores, according toBiz2Credit. Arora said many of these cities are tech hubs withsmall, nimble and profitable small ­businesses and with longhistories of innovation and success, and thus, higher creditscores.

By evaluating the market, credit unions can seize on untappedopportunities and establish several niches, Amantia offered.

“You can stay where you are and watch your portfolio disappearor you can adapt,” he said.