<p>WASHINGTON – From a new CUNA program to stated Congressional support, the drive for credit unions to get deeper into business lending was around every corner at CUNA's Governmental Affairs Conference. CUNA's Business/SEG Services Committee unveiled a package of business lending resources to assist credit unions in offering members small business loans and small business-related products and services. The new resources will be linked on CUNA's Web site (www.cuna.org). Market research, a just-finished Business Service Manual, samples of business-related operating forms and insights from leading business lending CUs can all be accessed from the site. Former CUNA Chairman Dave Maus, CEO of Public Service CU, Denver, facilitated a press conference announcing the new program. As CUNA's Chairman Maus spoke often about the need for credit unions to do a better job with meeting the needs of small business members. Maus said he's thrilled to see things coming together. At the press conference, leaders from small business-savvy CUs were on hand to offer some real-life experiences and advice. "We hired two former bank CEOs and a former bank vice chairman. We have over 75 years experience in our business lending department," said Charlie Grossklaus, CEO of Royal CU, Eau Claire, Wis. Developing business lending expertise is considered to be one of the challenges CUs will face in getting into business lending. Grossklaus said CUs may have to cherry pick some bankers to speed up the learning curve. Groksslaus' CU is on the leading edge of small business lending. It's done them for about 20 years, and has funded approximately $3.2 million worth over the last four years. He said his CU's average business loan is $150,000. Royal's business loans represent about 21% of its assets, highlighting a major problem credit unions will face going forward. The passage of H.R. 1151 capped member business lending at 12.25% of assets. Grossklaus' CU was given an exemption and grandfathered in, but today's CUs face that constraint. However, political support at GAC seemed strong to potentially break down some of these barriers. "I know credit unions can do a great job in helping small business people. We can not be successful communities just on strong real estate (lending)," said Representative Stephanie Tubbs Jones (D-Ohio). Tubbs talked about how important labor unions were to the development of the country, correlating that to how small businesses now play such a vital role, and CUs should be able to help them develop in their communities. In his general session address, Representative Paul Kanjorski (D-Pa.) also expressed support for credit unions getting deeper into business lending. Kanjorski said he would be there to support credit unions in doing more in this area. In still more MBL activity at GAC, Hector Barreto, administrator of the SBA said he would look at ways for more credit unions to get involved in SBA lending. Currently only community charters can get the SBA designation. Speaking during the CUNA business lending press conference, Gary Base, CEO of Community CU, Plano, Texas, said SBA loans are a win-win for credit unions because since they are guaranteed by the SBA, the loan amount is not counted towards a CU's MBL cap. Base said credit unions need to understand that serving small business members is about much more than lending. He said cash management systems (his CU uses one from Digital Insight), business accounts, retirement plans, and other business related products all can bring in fee income and boost ROA. Grossklaus said ROA for his CU's business lending portfolio is over 3%, a healthy number by any standards. Some say bankers will vehemently oppose any expanded powers of credit unions to do business lending, and will make the argument that "commercial" lending by credit unions is making them even more bank-like and is further proof that the tax-exemption should be taken away. But proponents say credit unions aren't looking to do what the large commercial banks do. "There is a perception that when we talk about member business lending we are talking about credit unions going out there and financing commercial development and strip malls and those sorts of things," said Kirk Cuevas, chief of staff and counsel to Chairman Dollar. "When in reality the member business lending that credit unions are engaged in are the panel truck lending, which is what we call it in Mississippi, where a guy wants to open a side business or he wants to buy a pick-up truck to use in a lawn care business that he is starting up. When we are talking about start-up capital credit unions should be leading the charge in this area," said Cuevas. Grace Mayo, CEO of Telesis Community CU, which is part of one of the most successful MBL CUSOs, said credit unions may be doing more business lending than they know, it's just masked in a different loan. She told stories of members taking out HELOCs to finance businesses. Mayo said that credit union data processors need to get on the ball in making their systems more business lending friendly. She said most systems do not have business account or business lending features. "We need to get the word out about that. The processors need to do better," she said. Interestingly, Credit Union Times has learned that credit union data processors USERS and AFTECH are currently developing systems to handle business accounts and lending. The units are working in conjunction with a Fiserv banking unit. [email protected]</p>

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