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Many credit unions are discovering that developing a package of business services to their product offerings is an appropriate strategic direction. This could be the next area of growth for credit unions. Many of their existing members run small businesses and would like the credit union to provide them the same type of valuable services they use personally. These types of services will help credit unions continue to meet their missions of serving their members. In fact, many credit unions already have business deposits but they are mixed in with the consumer accounts. Credit unions have also loaned money to small businesses but have not been able to meet most of their needs because of limits of resources and appropriate infrastructure to analyze the credit. Credit unions also lack the expertise to develop the products these small businesses need. Corporate credit unions are in a perfect position to help credit unions access the expertise and the infrastructure to build a package of business services. Corporate credit unions are here to help credit unions take advantage of economies of scale. Just like many credit unions use a corporate credit union to process their share drafts, they can also look to corporate credit unions to use the same concept to aggregate resources and expertise to provide services to small businesses. It starts with education. Corporate credit unions can organize training sessions on what services need to be developed, working with the SBA if necessary, what infrastructure is needed, how to incorporate these new products into the credit union. Leagues and other credit union organizations are also excellent resources to use to put education sessions together. The following services can be aggregated at the corporate credit union or other third party and provided to credit unions much cheaper than building the infrastructure themselves. * Consulting on developing a business services package of products. This is the next step after education. Access to expertise to assist with developing policies, procedures, operations, loan types, account structures, ancillary services and marketing can be done through a central source of expertise that corporate credit unions can put together. * Underwriting. This is the most expensive and critical resource to put in place. Just as corporate credit unions build investment and ALM expertise and share that with credit unions, they can do the same thing with lending expertise. * Risk monitoring and portfolio management. As with underwriting, this is expensive and critical to ensure the on-going risks are being appropriately monitored through the life of the loan. * Loan participations. Corporate credit unions were organized to provide liquidity to credit unions. The distribution channel that corporate credit unions have is perfect to facilitate local, regional and national participation networks. Corporate credit unions can also add a very valuable resource – liquidity. NCUA’s recently revised Regulation 704 now allows corporate credit unions to gain approval to participate in loans made by credit unions. Several corporate credit unions already have this authority and many will be getting that authority in the near future. Corporate credit unions also have access to NLAC, Network Liquidity Acceptance Corporation, which may be able to be used as a facility to securitize loans and sell them to other credit unions or to the secondary market. One of the keys to the success of any participation network is standardization of underwriting and documentation. This is critical especially if the loans are securitized. * Investments. Well, this is what corporate credit unions do very well. They can structure different accounts and investment types to specifically meet the needs of small businesses. * Images of share drafts. Small businesses have different needs than consumers and many of them either want their share drafts back or at least need access to copies. The imaging systems corporate credit unions and other credit union processors have developed over the past several years can solve this problem. This is especially true when those images are available over the Internet and the credit union’s home banking product. * ACH originations and wire transfers. As experts in payments systems, corporate credit unions are obviously partners to provide these services. Specific small business ACH origination software is available so credit unions can offer this service. * Merchant Services. One of the products small business will want is the ability to process merchant bankcards. Corporate credit unions can negotiate one contract on behalf of credit unions and take advantage of better pricing and higher service. * Other. Products and services such as coin & currency and electronic tax payments are already offered by most corporate credit unions and can be used to complete a package of business services. Because corporate credit unions are very good at aggregating, anything is possible. Serving small businesses is the future source of growth for many credit unions. It is a natural extension of serving your current members. They run small businesses and need services you can provide at a better price with better member service. There is an underserved market that credit unions are in a perfect situation to serve. Look to your corporate credit union or other credit union organization to help you develop and offer business services and manage the risks involved without having to put a very expensive infrastructure in place.

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