As some credit unions continue to be the lifeline formicroenterprises seeking out loans for less than $2,500, a numberof challenges to meet their needs may still exist.

The typical credit choices from micro businesses range frompersonal loans from family and friends and credit cards to paydayloans, according to a July eScan from CUNA.

Among the potential obstacles lenders face are recovering costs.On the supply side, it's difficult to price small-dollar loans,CUNA said.

Lenders entering the market express a desire to provide safe,affordable loans, but they also must charge an interest rate thatallows them to recover the high costs of offering the loans, theeScan analysis showed.

Underwriting polices may be another concern because as micro lenders have traditionally relied on relationship-basedunderwriting, they might be reluctant to switch to methods thatwould allow them to scale up. That would require moretransaction-based underwriting, using credit scorecards and otherqualitative factors.

The microenterprise industry is also constrained by a lack of data,according to eScan. Many lenders don't have robust cost accountingsystems or adequate information to make pricing decisions, and moreresearch is needed on the effects on borrowers and the overalleconomy.

Ultimately, some borrowers might still prefer the convenienceand immediacy of credit cards or payday loans to microloans, whichoften require training or financial education, or have othertransaction expenses.

CUNA said raising the member business lending cap, especially inthe aftermath of the financial crisis and a reduction in theavailability of business credit, would certainly aidmicroenterprises.

The NCUArecently enacted a program that makes more than 1,000 credit unionseligible for a low-income designation, which would also allow themto make unlimited MBLs.