When it comes to the size of businesses that are likely to usethe most products and services, credit unions should consider thosewith annual sales of $5 million or more.

Larry Middleman, president/CEO of CU Business Group LLC, sharedthat suggestion at the Portland, Ore.-based business lending andservices CUSO's National Business Services Conference in Portlandthis week.

Businesses with annual sales of $5 million or more are far morelikely to use loan products such as equipment loans and leases,commercial real estate loans and lines of credit, Middlemansaid.

Those businesses are also significant users of advanced depositproducts such as business debit and credit cards, remote depositcapture, ACH origination and sweep accounts, he added.

“It is clear that larger, more sophisticated small businesses will not only use more services, but thoserelationships will be considerably more profitable to creditunions,” said Middleman, who leads CUBG, a CUSO that serves morethan 460 credit unions in 45 states.

He also noted the strong commercial real estate activity ineight of the 12 Federal Reserve Districts, and that four of 10 small businessesare looking for loans this year.

With this demand, there are a variety of innovative businesseslending options available to credit unions today, he offered.

“From government guaranteed lending to equipment leasing toonline working capital loans, credit unions can choose from a menuof lending options to offer their members,” Middleman said. “Andall of these allow the credit union to keep the core businessrelationship while supplementing with additional products andgenerating fee income for the credit union.”

Indeed, the industry has fared better in business lending.Middleman said member business loans have increased by 44% since 2008 whilecommercial loans at smaller community banks have declined by over$120 billion or 25%.

Overall, commercial loan dollars at banks dropped 10% between2008 and 2011, and have now recovered to 2008 figures, he said.

Additionally, credit union charge-offs have stayed well belowthose of banks.

“Credit unions stayed below the magical 1% charge-off rate forbusiness loans, meaning less than 1% of total business loanbalances,” Middleman said. “On the other hand, commercial bankcharge-off rates went as high as 2.45% in 2009. Given thedifficulties of the recession, this performance by credit unions isquite admirable.”

Middleman also cited examples of how credit unions need tomeasure performance of their business services products.

“Knowledge of how many businesses are using your credit union'sproducts, and how profitable those products are, is something thatmost credit unions lack. Another area that needs better measurementis the total profitability of a business relationship,” hesaid.

He pointed out, “It's rather simple – figure out how toeffectively measure performance and then report it to staff, and Iguarantee you the results will be positive.”