Thursday, November 19, 2015

CUs, Albeit Small Players in SBA Lending, Will See More SBA Lending in the Future

An article in The American Banker (subscription required) pointed out that although credit unions are originating a small percentage of Small Business Administration (SBA) 7(a) loans today, credit unions are expected to step up their 7(a) lending efforts in the future.

According to the article, "the volume of SBA loans originated by credit unions reached a record $369 million in the fiscal year that ended Sept. 30, credit unions' share of the overall 7(a) market remained stuck at 1.6%."

However, the article noted that 7(a) lending by credit unions was up 23% in fiscal year 2015 from the previous year and 38% from two years earlier.

Moreover, 7(a) lending by credit unions should grow going forward. Earlier this year, the SBA signed a memorandum of agreement with the National Credit Union Administration promising guidance and support for credit unions interested in the 7(a) program.

In addition, there is a strong incentive for credit unions to make SBA loans, as these loans do not count against the aggregate member business loan cap of 12.25 percent.

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