Why is it that every time credit unions figure out a way to better serve their members, it almost immediately becomes controversial in some circles? Take member business loans as a current example. It's not hard to understand all the "shame on credit unions" rhetoric emanating from the banking industry. They find a way to be opposed to virtually everything credit unions do. The only way they would mind their own business is if all credit unions went back to what they were in the 1900′s. Come to think of it, then why are banking lobbyists so bent out of shape over the recent noises credit unions have been making in regard to providing their members with member business loans? That's exactly what the early credit unions did. A member needed money to buy a tractor for his farm, a cutting machine for his shoe repair shop, a cooler for her florist store, a replacement hoist for his gas station's repair bay, etc. and the credit union was there to make a member business loan. Everything we read today quotes someone, from the White House and a plethora of government agencies, to Main Street USA, about the importance of the small business person in America. We are bombarded with statistics about the number of jobs declining among large corporations, but increasing dramatically in the small business sector of our economy. Some high placed officials have gone so far as to say that small businesses are the backbone of this country. Furthermore, government agencies such as the Small Business Administration (SBA) are doing everything they can to promote the health and prosperity of small businesses in America. That most recently includes finding ways to take advantage of the credit union's traditional role in making member business loans by including as many credit unions as possible in SBA initiatives. That's the good news. The bad news is that credit unions wanting to get more active in the member business loan arena, and those discovering a need among their members for MBLs that they have not been meeting, have come under attack. If the negativism is because of misunderstanding about what credit unions were chartered to do (make loans to members for provident and productive purposes), that is understandable. That said, however, credit union groups large and small need to get their public relations machinery in action to accurately explain what member business loans are and are not and how they work. If on the other hand this is just one more misguided effort by banking lobbyists to justify their existence in an attempt to snuff the life out of credit unions, forget it. Not to be overlooked in the latest skirmish, MBLs, like all credit union loans, can only be made to members. That's why they are called "member" business loans. So if credit unions are making loans to members, as they have from day one, what's the beef? The only possible answer can be over what actually constitutes a member business loan. Like they regularly do, the banking industry feels it is their prerogative to define MBLs. How do they do it? By the amount of money involved in the loan? By setting rules on what is a real credit union loan (automobiles, appliances, houses, etc.) and what is in fact really a commercial loan disguised as a member business loan. Like what? Is that tractor, cutting machine, cooler, or hoist mentioned above a commercial loan? To a banking lobbyist bent on eliminating all but the smallest, most plain vanilla, single sponsor credit unions, absolutely. To credit unions that have the obligation to make loans to members, absolutely not! Looking beyond the current controversy, it seems that almost everyone wants to see credit unions get more aggressive in the member business loan area. That includes most larger credit unions, CU trade groups, regulators, and most of all, credit union members. Opposed (no surprise here) are the banking lobbyists and (surprise) some credit unions, those who fear for their own futures and the imagined or real competition from credit unions of the full-service variety which certainly includes those offering MBLs. Not to be overlooked in all this discussion are a few cautions that credit unions dipping their collective toes in the member business loan pool for the first time need to consider. MBL CUs will need to make certain that they have the expertise to handle these loans. Although they are clearly loans to members, they are different just as a mortgage loan is different from a used car loan. That translates into making sure there is expertise at the staff level which usually means bringing in outside talent. From a perception viewpoint, I would also suggest credit unions not call MBLs commercial loans. On the regulatory side, as with any CU lending program, credit unions and those organizations that represent them need to be vigilant about all the rules and regs that apply to MBLs. At the same time, they need to work to change them when they don't make sense. For example, in terms of today's dollars, does a 12.25% regulatory limit still make sense? Finally, on the plus side, besides providing a valuable service to members the credit union is authorized to serve, member business loans can lead to a credit union helping MBL members in many other areas such as cash management. Sounds to me like a win-win situation for the credit union as well as it s members. So go away banking lobbyists before credit unions return the favor and offer to help you run your business. "A credit union is a not-for-profit financial cooperative organized to serve the changing financial needs of all the members who own it." Comments? 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