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LAS VEGAS – Credit unions and their CUSOs are missing some important opportunities for loan growth and cross-selling if they don’t start getting into the Small Business Administration’s 7(a) program while also venturing into property and casualty insurance. Speaking to CUSO executives earlier this month at NACUSO’s annual conference, one group of SBA consultants argued here that many small businesses now look to CUs to fill a vacuum left by commercial banks that have “walked away” from small business loans or have centralized their operations to such a degree that branches give poor service. “I think it’s important that credit unions realize that SBA loans are an important tool in protecting their market share given the explosion in business lending, the downsizing by corporations and the influx of baby boomers,” asserted Joanna R. Bruno, president of a Glendora, Calif. consulting firm bearing her name. The key for CUs, she said, is to really examine their business lending policies and the amount of risk they expect to take, something they really haven’t done to date. The average CU business loan is running $79,000 and the average SBA loan is at $189,000, but “there has to be board and management commitment as well as an understanding of advantages and disadvantages” of business lending before getting started. She said the first step in the SBA process is acquiring a license “which you can receive within three months after you apply to a district office.” The challenge, of course, she said is to follow policy “because guarantees can easily be taken away” by the agency. Another business lending panelist, Michael G. Hales, senior executive vice president of Counter Intelligence, Associates, in San Juan Capistrano, Calif., urged CUs to adopt “economies of scale” when it comes to business lending by pooling operations in joint CUSOs. Taking a different tack from other speakers who urged hiring all available commercial bank talent, Hales suggested such qualified expertise “is a fast disappearing resource” since banks have halted branch training. “The banks are fighting among themselves for this talent, so I think the best course for credit unions is to leverage themselves by having multiple CU’s building single CUSO’s or utilizing third parties,” advocated Hales. CUs “have this wonderful reputation for cooperating and in business lending they should be doing that as well,” declared Hales, reiterating a familiar line at the NACUSO conference: business lending remains a “gold mine” of opportunity. Discussing the bank lobby’s recent attack on CU entry into SBA loans, Hales maintained “the bankers can throw tantrums all they want and throw themselves on the floor,” but the SBA remains highly encouraging for CUs to sign up for SBA loans. -

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