When it comes to business lending practices, policy is theguiding principle to turn to.

Larry Middleman, president/CEO of CU Business Group LLC,offered that reminder during a recent webinar to discuss thebusiness lending CUSO's new member business loan policytemplate.

“It shouldn't be too detailed, but also not too light,”Middleman said. “We hear from credit unions all over the countryand understand what issues are critical to effective MBL riskmanagement.”

The Portland, Ore.-based CUBGsaid it serves 392 credit unions in 43 states.

Middleman said over the past decade, the CUSO has developed andrefined its policy template. Each year, the template is updated tohelp credit unions incorporate the most recent regulatory changesand best practices.

One of the major revisions to this year's policy is a revamp ofthe risk rating system to segregate commercial real estate incomeproperty lending from commercial and industrial lending, Middlemansaid. This aims to create a better match of cash flows to the riskrating, he added. The CUSO's upgraded credit presentation nowfocuses more on balance sheet analysis and includes more details onbusiness history, marketplace and management information, riskmonitoring and loan exit strategies according to CUBG.

“We've refined this over the years through the economic timesand heightened examiner scrutiny,” said Jim Brekke, CUBG seniorvice president and chief credit officer.

Middleman said it's critical for a credit union's board ofdirectors and business loan committee to fully understandcredit.

“It's not just about doing a simple income property loan andcalling it good. Credit unions are looking to diversify, to getinto C& I loans, and into full deposit relationships. Thisupdated credit presentation allows us to accommodate these types ofrequests.”