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WASHINGTON – A new pilot project from CUNA and a designated small business lending corporation promises to allow a wide variety of credit unions greater access to loans guaranteed by the Small Business Administration. The federal agency that backs loans to small entrepreneurs decided on February 14 to allow all types of credit unions to apply for the federal loan guarantee program. Previously, the agency had restricted participation to only community-chartered institutions. Under the arrangement, credit unions, whether they are CUNA members or not, will be able to use the back office facilities of NewTek Small Business Financial Services, a $10 billion subsidiary of NewTek Financial Services. The subsidiary is one of 14 designated small business lending corporations around the U.S. licensed by the SBA to originate SBA guaranteed loans. Credit unions will be able to access the back office support through a Web site, by phone or through developing a relationship with NewTek. “However a credit union wants to structure the relationship,” said CUNA CEO Dan Mica, announcing the project. “Under this project, a credit union without a small business lending program at all will be able to offer a member the help they need with their business loans,” Mica said. Mica explained that CUNA considered the arrangement a “pilot” because the two firms had not yet ironed out some of the details, such as how many staff the project will take, how many additional resources, if any, it might need and what the credit union demand might be. The keyword behind the program is flexibility, said Eric Richard, CUNA General Counsel. If a credit union wants to offer one or two guaranteed member business loans throughout the year, they can access NewTek at the most basic level, Richard explained. NewTek can originate the loan and service it as well, including liquidating it if the business fails. Or, if a credit union sees member business lending as a potential profit center, NewTek will help them train their staff in the SBA application process, he said. “One of the barriers to more credit unions taking part in small business lending has been the perception of the time and difficulty working with the SBA can take,” Mica noted. “CUNA believes this pilot takes a step toward eliminating that perception.” The pilot project’s site on the World Wide Web will be linked from CUNA’s site (www.cuna.org) after about 30 days, Mica said. Phone support through a toll-free number will be available more quickly and the phone number will be posted on the CUNA Web site before the end of February. Under the Credit Union Membership Access Act, the portions of a small business loan guaranteed buy the SBA do not count against a credit union’s member business lending cap, the CUNA staff said. Business loans guaranteed by the SBA also do not count against a bank’s capital limitations, they noted. See more small business lending news [email protected]

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