Of the 170 intermediaries in the SBA's micro loan program, only two credit unions are currently involved. The agency said it is working hard to increase those numbers.
The $55 million Alternatives Federal Credit Union and the $246 million Self-Help Federal Credit Union have been providing the loans since 1999 and 1992, respectively. The SBA said it has moved loan processing from a centralized location to district offices and increased marketing efforts to boost program participation. The American Recovery and Reinvestment Act recently provided an additional $50 million for loans and $24 million for technical assistance.
"There is a natural overlap for credit unions," said Grady Hedgespeth, SBA director of office of financial assistance, on the indus-try's reputation with micro lending. "With the absence of capital, [small businesses] are looking for resources. Credit unions have been close to the ground on these issues for years."
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Alternatives has closed on 60 micro loans totaling $579,000, said Bob Anderson, business loan officer.
"In our experience, there's been a much slower default rate on the micro loans than our standard loans, including 7(a) loans," Anderson noted.
Self-Help has closed on 650 micro loans, said spokesman David Beck.
"We are hugely supportive of them," he said adding SBA technical assistance grant funds "makes it possible for us to do them in a responsible way that is also good business for us."
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