If you need a business loan, a credit union may not the first lender that comes to mind. But you may want to think again. Credit unions have been lending to member small businesses for more than a century, and they are continuing to lend even as the credit crunch has made it more difficult for many small firms to borrow from traditional sources.
A slew of recent articles describe how credit unions are helping firms get the cash they need:
– A couple who received an equipment loan for their construction firm after a bank said no.
– Cabin crafters, a refurbisher of corporate jet cabins got a loan from their credit union, which just happens to have more than doubled its small business lending last year.
– The managers of a
As my fellow AllBusiness.com blogger Sam Thacker pointed out in a previous post, some credit unions make a lot of small business loans, but the loan sizes themselves tend to be smaller than banks.
That’s due in large part to a federal law instituted in 1998 that limits member business lending to 12.25 percent of the credit union’s total assets. There’s an effort underway to raise that limit and get more money flowing from credit unions to small businesses.
Near the end of 2009, Senator Mark Udall of
Credit unions aren’t charities. They must make sound business judgments, or faces losses that can cause the same kind of trouble that befalls banks. They are, however, non-profit and member owned. Their members have a common bond (geographic, professional, etc.).
CUNA says that raising the limits will increase small business lending by $10 billion within the first year of enactment, producing more than 100,000 new jobs. You can share your views on this effort through CUNA’s Action Alert.
If you are looking for a small business loan, you may want to talk to your credit union. Don’t belong to one? Use the Credit Union Locator to learn which ones you may be eligible to join. And if you have (or haven’t) been able to get a credit union small business loan, please feel free to share your story here.
Gerri Detweiler’s mission is to provide reliable, unbiased answers to your credit questions. She is the co-author of Business Credit Success: Get on the Financing Fast Track and serves as Personal Finance Advisor for Credit.com.