The credit union industry has a long history of aligning with incubator programs, said Michael Hales, a partner with the Rochdale Group Inc., a provider of management and financial consulting services to credit unions. Hales has created 13 member business lending CUSOs and is currently working to do the same with credit unions in New York and South Carolina.

"We offer a national network of [member business lending] CUSOs that are poised and ready to provide credit to America's small businesses," Hales said. "This network of CUSOs can partner with local universities where small business incubators already exist, but local funding perhaps does not. They can partner with local chapters of [Service Corps of Retired Executives] and local small business investment corporations to provide a full range of small business incubating services."

Hales said one grassroots example of what Obama is trying to do can be seen at $472 million Amplify FCU's Credit Union Business Services LLC. The CUSO created ThinkSmart, a subsidiary that partners with local Austin small businesses to bring such services as micro-loans, payroll administration and processing, accounting, legal assistance, IT networking and Web site design and marketing and advertising to member business owners.

"This is a perfect example of the win-win philosophy that small business networks can accomplish-something that the credit union movement was built upon," Hales said.

Obama also wants to expand loan programs for small businesses. He co-sponsored the Small Business Lending Reauthorization and Improvements Act, which expanded the Small Business Administration's loan and micro-loan programs to provide start-up and long-term financing that small firms traditionally can not receive through "normal channels."

Beardsley said credit unions have the mission to support micro-loan programs but not necessarily the experience, risk tolerance or efficiencies to effectively support this growing new class of entrepreneurs. Expanding the funding of qualified intermediary organizations would allow distribution of resources to smaller companies, he offered.

"Micro-loan programs need stimulus and support to reach their potential. In the traditional financial world, there is little direct incentive to invest time and money at the small end of the scale," Beardsley said.

Providing incentives to encourage industrywide support of micro loans would be a strong start, Beardsley proposed. As an example, if 1,000 credit unions each invested $50,000 into a "Next Generation" fund, receiving some form of incentive or guaranty from the government to hedge their potential risk, the movement would have $50,000,000 of seed capital to support new small businesses throughout the country.

"Imagine the power of 1,000 credit unions working together to build a virtual investment into the next generation of small business in America," Beardsley said.

Hales said many commercial bankers participate in the funding of micro-loan pools to meet Community Reinvestment Act requirements. If the president-elect's definition of "normal channels" as it pertains to startup financing available outside of traditional lending circles means commercial banks, Hales said credit unions need to convince the new administration that they are a necessary and viable solution to solving the capital needs of small business. As proof, Obama can look to community development credit unions, which have focused on micro-lending in many key geographic areas, Hales noted. Member business lending CUSOs can go a step further by establishing a fund to provide micro-loans to qualified start-up businesses.

"America's credit unions, even though constrained by an artificially low restriction on their ability to serve the small business underserved, have risen to the challenge," Hales said. "Through the same innovative and entrepreneurial spirit that defines the DNA of America's small business owners, credit unions have become active providers of financial assistance to small business."

Indeed, many proposals within Obama's 15-point plan to reinvigorate small businesses can be linked to the credit union model. For instance, the president-elect wants to provide training and technical assistance for rural small business and provide a 20% tax credit on up to $50,000 of investment in small owner-operated businesses. Hales said a growing number of credit unions have formed lifelines to rural businesses, many of which are more comfortable working with local lenders. The NCUA has an ongoing partnership with SBA to reach out to underserved and rural communities.

Obama has also proposed increasing minority access to capital. Less than 1% of the $250 billion in venture capital dollars invested annually nationwide has been directed to the country's 4.4 million minority business owners, according to Obama's plan. In recent years, there has been a significant decline in the share of small business investment company financings that have gone to minority-owned and women-owned businesses. Beardsley once served on the investment committee for a local women and minorities' loan program whose mission is empowerment through business development training, vendor certification, business-to-business networking and accessible capital assistance programs, so he can see the parallels. Hales said credit unions have a "long and proud heritage" of reaching out to the underserved.

"This industry will continue to be color [and] gender blind as we continue our quest to provide financial literacy, products and services to all Americans who qualify for membership because of where they work, live, worship or some other nonrace or gender-based membership qualification," Hales suggested.

Not all of Obama's proposals are convincing, Hales acknowledged. While the president-elect has called for lower health care costs with a small business health tax credit and access to a low-cost national health exchange, Hales would like to see more meat in worker compensation cost issues.

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