In the past few months, credit unions have seen several newbills introduced in Congress that would help advance their abilityto provide access to much-needed capital to small-business membersfor up to $50,000. The Small Business Administration's ( SBA)fundamental lending mission to help creditworthy small businessborrowers that otherwise would be unable to access credit onreasonable terms and conditions goes hand-in-hand with thecredit union philosophy of 'people helping people.'

In February, Bill Trace of San Diego went in search for a smallbusiness loan of $35,000 to invest in a swimming pool business inSan Diego. His bank turned him down. He asked around and walked into University & State Credit Union (assets of $794 million) ona tip that they had begun to give out small business loans. By themiddle of March he had the funds, his pool business and a newcareer.

“I had no idea credit unions were lending money for smallbusinesses,” he said. “I would have gone from bank to bank askingfor a loan if I hadn't heard about credit unions lending. I'mpulling my money out of my bank and telling everyone I know aboutmy small business loan.”

In the past, most credit unions haven't offered loans via SBAprograms, but that's changing as larger credit unions come onboard. According to the SBA, the outstanding balance of SBA loansby credit unions has risen nearly 50 percent since 2011, from $810million to $1.2 billion. Another change is that such loans asTrace's were not fully backed by the SBA-now they are.

In February, U.S. Small Business Administration (SBA)Administrator Maria Contreras-Sweet and National Credit UnionAdministration (NCUA) Board Chairman Debbie Matz signed aMemorandum of Understanding (MOU) to invest in America'sentrepreneurial potential by expanding the accessibility of smalldollar SBA loans from credit unions. By partnering together, thetwo groups will be able to increase awareness about SBA's loanprograms for credit unions and the NCUA.

According to the National Credit Union Administration andthe Federal Deposit Insurance Corp., federally insured creditunions (FICU) have already outpaced banks in small-business loangrowth over the past several years- here are the numbers to proveit:

2011: Small-business lending up 5.1 percent at FICUs, down 4.3percent at banks.

2012: Up 6.5 percent at FICUs, down 1.5 percent at banks.

2013: Up 10.1 percent at FICUs, down 0.5 percent at banks.

2014: Up 12.4 percent at FICUs, up a modest 1.9 percent atbanks.

Unfortunately, credit unions have been hampered from doing morebusiness lending by an arbitrary lending cap that limits theirbusiness loans to 12.25 percent of assets, but no more. The loanamounts will not count against the total assets federal cap oncommercial lending, in part because for their federal tax exemptstatus.

“A unique aspect of the SBA and NCUA partnership is that SBAsmall dollar loans do not count against credit unions' businessloan cap, so they are well suited to expanding access to theseloans. This provides flexibility to credit unions to distributesmall dollar loans, increasing access to capital to local economiesand enriching the entrepreneurial communities which credit unionsserve. Since 2011, the outstanding balance of SBA loans by creditunions has seen nearly a 50 percent increase – from $810 million to$1.2 billion. This signals a growing demand for SBA loan programs.Millions of Americans have used their credit union to finance theircar, home or children's education. We want to empower creditunions to finance small business start-ups, too,” saidAdministrator Contreras-Sweet in a statement.

SBA loans are available for most businesspurposes, including the purchase of machinery or equipment, debtrefinance, working capital, expansion needs, or start-up of a newbusiness. Repayment terms are generally longer than conventionalloan programs, which can have a positive impact on a company's cashflow.

Advantages of an SBA Loan:

• Up to 90% financing available
• Longer repayment terms – up to 25 years for real estateacquisitions
• Fully amortized loans – No Balloon Payments
• Competitive interest rates
• Funding typically occurs as fast as 45 days
• Projected income considerations

Once a loan is approved, the SBA has a vast network of resourcepartners such as SCORE, Women's Business Centers (WBCs), and SmallBusiness Development Centers (SBDCs) to offer free counseling andtechnical assistance to help small business owners deploy theirworking capital and grow their businesses and revenues. The SBA ismaking small dollar loans a top priority in efforts to increasebusiness lending and reach to underserved borrowers. Five yearsago, credit unions made 835 SBA loans of under $50,000 totaling$21.7 million. But the totals dropped to 502 loans worth $12.4million last year.

According to the SBA, an additional benefit of this partnershipis that it expands access to capital to encore entrepreneurs suchas Trace, individuals planning to start a business after earliercareer endeavors. The average age of credit union members is 47 andthe fastest-growing group of entrepreneurs consists of men andwomen age 50 and above, spurred by the low cost of starting asuccessful small business.