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WASHINGTON – Business lending at credit unions has a safer track record compared to banks and thrifts, according to a U.S. Treasury Department study. The study found that member business loans are generally less risky than commercial loans made by banks and thrifts because they generally require the personal guarantee of the borrower and the loans generally must be fully collateralized. Ongoing delinquencies – for credit unions, loans more than 60 days past due, and for banks and thrifts, loans more than 90 days past due – are lower for CUs than for banks and thrifts, the study showed. Credit unions’ mid-year 2000 loan charge-off rate of 0.03% was much lower than that for either commercial banks (0.60%) or savings institutions (0.58%). Treasury also found that member business lending “does not pose material risk” to the National Credit Union Share Insurance Fund. From 2000 to 2003, MBL net charge-offs averaged 0.08% at credit unions while the rate at commercial banks was 1.28% and 1.11% at savings institutions.

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