SBA 7(a) Participation Continues to Grow Among Credit Unions

WASHINGTON – The number of credit unions participating in the SBA's 7(a) lending program continues to grow. As of Sept. 30, credit unions produced 1,172 SBA loans totaling $122,695,618 in guarantees. More than 250 CUs are now 7(a) lenders. Callahan & Associates, Inc. reported that the noticeable difference between those who participate in the SBA program and those who do not was the average loan amount. Credit unions that do not participate in the SBA 7(a) program approved an average loan of $179,043, 71% higher than the average SBA loan. “A plausible explanation for the discrepancy is that the SBA guarantees up to 85 percent of a loan up to $150,000 and 75 percent of loans over $150,000 to a maximum guarantee of $1.5 million,” wrote Tom Geggel, Callahan industry analyst in a recent analysis on the firm's Web site. “Credit unions that participate in the 7(a) program are able to cover more of their risk in the lower tier and have less of an incentive to fund higher loan amounts.”