AUSTIN, Texas - Budding entrepreneurs are quickly realizing thatAustin is starting to become one of the more "small businessfriendlier" cities in the nation. To accommodate them, seven Texascredit unions have partnered to bring business lending and depositservices to its members and beyond. CU Business Solutions is thename of the new CUSO and its seven owners are $461 million A+ FCU;$358 million Austin Telco FCU; $216 million Greater Texas FCU; $366million IBM Texas Employees FCU; $40 million Texas Health CU; $671million University FCU; and $497 million Velocity CU. All of theAustin-based credit unions are familiar with working with oneanother having linked up before through a shared ATM network, saidKerry Parker president/CEO of A+ FCU. The idea made sense giventhat, with the exception of University FCU which started offeringbusiness loans in 2002, none of them had the expertise or resourcesto strike out on their own, most acknowledged. "For us, workingtogether, we're able to get something up sooner than we would haveindividually," Parker said. At this point, loan financing amountminimums will vary with each credit union, Parker said. As for SBAlending, each respective credit union will have to pursue becominga lender on its own. University FCU became an SBA lender in thefall of 2004. Business deposit services will also be offered,Parker said. The CUSO is scheduled to open in September or October.According to the SBA, Austin was recently recognized as one of fivecities in the country for its innovations in entrepreneurship.Innovation was measured by factoring in research and developmentexpenditures, number of patents and hi-tech's share of the localeconomy. Austin ranks in the top five along with Fort Collins,Colo.; Raleigh, N.C.; Provo, Utah; and Boston. Austin's smallbusinesses will also get another financial boost. In early July,the Texas Certified Capital Co. (CAPCO), a state economicdevelopment program designed to encourage business growth, received$23 million from Advantage Capital Partners, an equity and venturecapital firm. Small businesses continue to provide Texas' largestsource of new jobs and a constant stream of employmentopportunities for minorities and women, according to the SBA. ForUniversity FCU, which started offering business loans in 2002, thetiming could not be better. Since 2002, the credit union hasamassed 309 business loans totaling $15 million, according to JamesNastars, senior vice president of lending. Partnering with his sixcomrades just made economic sense. "We see it as a way tostreamline some of our back office (functions) and get economies ofscale," Nastars said. "It also will help to develop a local networkof loan participations. We'll have someone who really understandsthe local market economy." Austin Telco FCU had some experience onthe business deposit side having opened more than 1,000 businesschecking accounts for everyone from Avon cosmetic representativesto fairly large companies, said James Poplin, president/CEO.However, members were asking for lines of credit and businessloans. "A lot of them were hesitant to move their business(banking) from their banks," Poplin said. "We have some of themthat really want to move everything over right now." A+ FCU is alsoseeing pent up demand, Parker said. "There's a member who is a realestate developer who wants to move from his bank, but he's waitingfor us," Parker said, adding the credit union actually bought oneof their branches through the developer. Roughly 2,000 of VelocityCredit Union's members own their own businesses, said Larry Strong,president/CEO. They range from the firefighter with his own pestcontrol business to the owner of a bakery to a member who justopened a wrecker service. "Quite frankly, we just didn't know howto do (business lending) by ourselves," Strong said. "When wetalked to consultants about it, they said it was a must that thecommercial lender be experienced" with a specialty in smallbusiness, real estate and "big time" commercial lending. A searchis already underway for office space and a professional to serve aspresident of CU Business Solutions. Additional staff, possibly upto four employees, may be hired by the new executive in the shortterm, Nastars said. Texas has been a hotbed of activity lately withattempts by $1.4 billion Community CU and $1.2 billion OmniAmericanCU to convert to mutual savings banks. In May, Dick Ensweiler,president/CEO of the Texas Credit Union League, testified during aHouse Financial Services Subcommittee that the regulatory reliefprovisions contained in the Credit Union Regulatory ImprovementActs would dissuade some credit unions that feel they are bumpingup against the 12.25% business lending cap from converting tomutual savings bank charters. Meanwhile, some Texas community bankshave been very vocal about their disapproval with credit unions andtheir business lending entry. Surprisingly, Strong is sympathetic."I feel sorry for community banks and middle-sized credit unionsbecause big bankers are buying them out and we're seeing a lot ofcredit union mergers," Strong said. Still, "Austin is growing likea weed. I think community bankers will keep their customers and theones that are with us will stay." In the same breath, Strong saidNCUA should give credit unions a little bit more leeway in businesslending pointing out that the agency was nervous when share drafts,CMOs, indirect and subprime lending first came out. "NCUA shouldunderstand that we will do due diligence before getting into newareas," Strong said. "If we're to grow and stay healthy, ourregulator needs to deal with us individually and not overall like ashotgun effect." [email protected]