Credit unions are a source of small business loans that many business owners overlook. True, a good percentage of credit unions don’t offer business loans (according to an Entrepreneur.com article, that percentage is 33%). Then those that do often have a narrow selection of loan options. But credit unions are stable and have been stable for some time. More credit unions have opened up their membership to a broader base as in friends, neighbors, family members. As an example, I have a car loan for my business vehicle through one of the credit unions associated wtih IBM. I never worked for IBM but a good friend of mine did. Consequently, I was able to join and take advantage of their low vehicle financing rates.
Here’s an excerpt from the Entrepreneur.com article, ‘”While only offered at approximately one-third of credit unions, business loans are the fastest-growing segment of these member-owned institutions’ loan portfolios, with double-digit growth reported in three of the past five years. In 2009 and 2010, however, this growth dipped to 9.9 percent and 6 percent, respectively.
Part of the reason is that credit unions are saddled with a 12.25 percent asset cap, which has been in place since 1998. The cap means that they can’t extend more than 12.25 percent of their total assets in business loans. According to the Credit Union National Association (CUNA) in Washington, D.C., 360 credit unions are at or quickly approaching the cap, accounting for about 60 percent of credit union business lending.’
I have seen numerous requests on how can credit unions reach out to the business community. So I know that many more credit unions are considering offering business loans but aren’t sure how to get the word out. Others offer them but have few customers who take advantage of them. If you are in the market for business financing, contact your credit union or one that you are eligible to join and inquire about their business loan programs. Your qustion just may make someone’s day!