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IWall St. JournalI Small businesses turning to CUs
NEW YORK (3/4/09)--Unable to get loans at banks, more small-business owners are turning to credit unions, reports the The Wall Street Journal. And credit unions could do more if an arbitrary cap on business loans were lifted, the Credit Union National Association told the nationwide newspaper. "Credit unions are more able--and willing--than most of their banking counterparts to dole out money to small businesses," the newspaper noted (March 3). It cited CUNA statistics, noting that 27% of credit unions in the U.S. offer business loans, and the amount of the loans was up 18%--to almost $33 billion--last year. "In this really bad environment, we're doing more and more loans," said Mike Schenk, CUNA senior economist, told the Journal. The Journal reported that "Many credit unions say they would lend out even more money if they could. But a 1008 federal law caps the amount of business loans credit unions can have at 12.25% of assets." Credit unions hope to convince Congress to introduce legislation to lift the cap, it added. CUNA's Schenk also noted that the 12.25% cap is "an arbitrary cap that was imposed in 1998 as part of the Credit Union Membership Access Act." Historically, there were no restrictions on credit union business lending. Also interviewed were:
* Larry Wilson, president/CEO of Coastal FCU, Raleigh, N.C., who told the paper credit unions could provide $10 billion in small-business loans within the next 12 months without costing taxpayers; * Kenneth Beine, president/CEO, Shoreline CU, Two Rivers, Wis., who said more "Main Street" loans have arrived to the credit union since traditional sources of funding dried up; * John Duggan, president, Chem-Dry of Madison, and Matt Rosenhal, vice president of business services, Summit CU, Madison, Wis., who were in a photograph with the article and told about Chem-Dry receiving two business loans from Summit; * Nick Frescas, member of West Texas CU, El Paso, which gave him a loan after his home day-care business failed to get a bank loan in 2005 because it didn't have enough assets. It is now applying for a $750,000 loan for its second building--with the credit union; * Curtis Anderson, vice president, Mountain America CU, West Jordan, Utah, who said his credit union requires more proof in underwriting but continues lending to people starting businesses.
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