BATTLE CREEK, Mich. – For OMNI Community Credit Union, seeking out a partner to provide business loans to its members involved two critical characteristics.

The $200 million credit union wanted a local connection and an entity that could provide servicing after closing the loan to ensure it remained in regulatory compliance. OMNI Community CU found both of those with Commercial Alliance, a two-year old, multi-owned CUSO based in Troy, Mich.

"When you're doing commercial lending, especially here in Michigan where we're facing some economic challenges, we wanted to be careful that we not only serve our members, but the entire organization by not making poor loans," said Ted Parsons, president/CEO. Through Commercial Alliance, loans up to $5 million will be offered in addition to construction and permanent loans for owners, developers or investors. Machinery and equipment loans as well as working capital lines of credit will also be available. For smaller or recurring financing needs, OMNI said it will provide businesses with home equity loans, term loans and lines of credit. OMNI is the CUSO's first affiliate, meaning it is the first credit union to sign on as a non-owner, said Terry McHugh, president/CEO, Commercial Alliance, which has targeted another 25 to 30 Michigan credit unions as potential affiliates. Coupled with member demand and interest from OMNI's board in offering member business loans, the credit union began discussions in February and an agreement was signed with Commercial Alliance on April 27. So far, OMNI has closed a $200,000 loan for a local business' building expansion, Parsons said. That business had $1 million in annual revenue last year, but the credit union is ready to assist those with up to $5 million. The credit union has no immediate plans to offer SBA loans, but may consider them in the future, Parsons said. OMNI received a community charter in October 2004 and up until then, it was mainly select employee group-based with more than 160 of them, Parsons said. Many of those SEGs are smaller businesses and will be among the first to be targeted for commercial loans. "This will allow us to reinvest in our communities," Parsons said. The timing for the business loan partnership comes at a time when Michigan is being hammered by the layoffs and plant shutdowns in the auto industry, Parsons said. The state's fiscal situation "has been challenging for the last several years" resulting in decreased revenues and state program cuts, he added. "It's having a trickle-down effect on businesses here," Parsons said. Still, while the requests for business loans from members continue to come in, OMNI needed the underwriting expertise. "We wanted to do it right," said Parsons who pointed out that the credit union considered launching a business lending division internally, but decided against it because the costs to hire appropriate staff were too expensive. "To do business lending, you need to have the quality of underwriting and the servicing after the fact." Commercial Alliance was founded in July 2004 by Capital Community Credit Union, Community Choice Credit Union, E&A Credit Union, Lansing Automakers Federal Credit Union, Monroe County Community Credit Union, Michigan Catholic Credit Union, Research Federal Credit Union, Team One Credit Union and Telcom Credit Union. In addition to loans, the CUSO also provides, loan participations. McHugh's more than 25 years of commercial lending experience in addition to the expertise from the rest of the staff was a "critical factor" as OMNI sought out partners. "We're very excited," Parsons said. "We're anticipating working with even more businesses in the future."