FARMERS BRANCH, Texas – Texas is following the lead of CUNA, Ohio and other states that have Leagues examining how credit unions can better serve small businesses. Credit Union Resources, Inc., the fee-supported affiliate of Texas Credit Union League, has established a Small Business Assistance Task Force and charged it with evaluating the small business climate within the state. Chaired by Larry Hall, CEO of Amarillo Community FCU, the committee is comprised of 13 CEOs, representing credit unions of varying asset sizes and geographic regions. Representatives from TCUL's strategic business partners, CUNA Mutual Group, Southwest Corporate FCU and Town North Bank, were also invited to the group's first meeting this spring. Topping the task force's list will be determining the risks and opportunities associated with member business lending. "Our objective is to provide a medium where credit unions can safely get involved in small business lending," Hall said. "We want to provide a platform of information so complete that credit unions will have everything necessary to decide whether or not this is something they should engage in." "We're looking for ways to spread risk," Hall explained. "With the bulk of credit union loan portfolios in auto loans, with extraordinarily low-rate loans being offered by auto financing companies and with new competition from State Farm and other non-financial institution lenders, it's important to adjust previous lending strategies." Hall said the group is trying to assess what's already been done successfully in "more mature" programs inside and outside Texas. "We've requested information from Ohio and others who are further down the road. We want to take advantage of their extensive research, rather than reinvent the wheel." The Small Business Assistance Task Force is also charged with recommending to the Credit Union Resources board the creation of other products that could be beneficial to small businesses, according to Mark Chatfield, Texas Credit Union League's Chief Marketing Officer and a liaison to the task force. "This train is starting to gain momentum. Member business lending is definitely the backbone of the services we hope to provide, but we will be looking at a full suite of member business programs," Chatfield said. Other services the committee likely will examine, according to Chatfield, include checking accounts, card services, cash management, ACH origination, credit services, payroll services, and sweep accounts. With the help of outside strategic business partners, services such as insurance and estate planning might be feasible. "This is unchartered territory, but it represents possibly the greatest opportunity credit unions now have to expand services to members. Most small businesses don't have access, or don't have affordable access, to these services," said Chatfield. "We will be trying to understand the complexities of the market," Chatfield continued. "One in seven credit unions reports that they already do member business lending. We want to find out how we can position a credit union to be most effective, how we can provide education for volunteer board members, what other products and services we can offer, and what we can do cooperatively, either with business partners or with credit unions. The biggest thing that came out of our first meeting was the realization that we have a need for additional education, from CEOs to staff to boards of directors." At its first meeting, the Small Business Task Force identified two action steps: 1) Start the process of engaging state regulators in conversation concerning MBLs, and 2) Encourage data processing vendors to help implement small business cash management account services. According to Chatfield, many data processing programs are not currently configured to segment business accounts. The task force has not yet set a date for its next meeting, however, the TCUL Board of Directors at the recommendation of the task force adopted the following resolutions at its July 5 meeting: * To encourage CUNA to propose that the Federal Credit Union Act be amended to increase the maximum business lending restriction. * To request that CUNA and other trade associations propose to NCUA to increase the definition of member business loan. Many viable small businesses lack affordable access to financial services that might propel them toward future growth. But such services may be untouchable by fledgling operations seeking assistance from their local banks. Credit unions may be the answer. "What we're hearing from Austin and Washington is that small businesses are underserved," Chatfield said. "And we believe meeting small business financial needs is congruent with credit union philosophy." [email protected]

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