SALT LAKE CITY — Mountain America Credit Union was profiled in the October edition of Entrepreneur magazine for its financing help to small businesses.
Titled "A Perfect Union," the article talks about the $1.9 billion CU's facility expansion loans to Mobilight, Inc., a company that makes a portable lighting tower. Mountain America provided a loan for the company's first facility expansion and is now helping finance the construction of a $2 million, 24,000 square-foot facility.
Mobilight owner Ross Johnson said "a frustrating experience with a large regional bank a few years ago" led him to consider a credit union. Of its relationship with Mountain America, Johnson said, "I can walk in and visit with them and come up with ideas. We know each other very well; it's all about the personal relationship."
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The article cites Small Business Administration data showing 1,172 SBA loans were made by credit unions in 2005 and mentions legislation that would increase the MBL cap of 12.25% to 20% of total assets and raise the MBL loan limit to $100,000. The article also says "Unlike banks, credit unions tend to be 'relationship lenders,' meaning they take into account a host of factors when reviewing a loan request, not just financial data."
David Ely, professor of finance at San Diego State University, explains that "Relationship lending [is] based more on intangible factors, [such as] a loan officer visiting the company and getting to know the owners and the managers, talking to suppliers and customers, and getting a sense of the business and the liabilities of the business that way, as opposed to using hard data. Relationship lending is a niche [that credit unions fill]."
Readers are told that a lot of the more than 1,700 credit unions that are active business lenders "are involved in a very small way and only have a couple of [business loans]," which includes financing to acquire rental property or vehicles because those areas are similar to their other areas of expertise, Ely said. The article also encourages credit unions as an option for business financing saying they can charge less for loans and are willing to make smaller loans under $50,000–"many loans banks won't" touch.
"A good rule of thumb: A credit union with $100 million to $500 million in assets is more likely to be an experienced commercial lender," said Ely, the article reported.
On reaction to the article, Kent Moon, president/CEO of Member Business Lending, LLC, which was founded by the CU's CUSO, said, "We know what small business owners face and we help them through the loan process. We meet our members' loan requests quickly and efficiently." –[email protected]
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