ALBUQUERQUE, N.M. (7/7/10)--Credit unions in New Mexico and nationwide are making more member business loans while banks are making fewer, according to New Mexico Business Weekly. Friday’s article, “U.S., New Mexico credit unions woo small business borrowers,” tells the story of Andrew Mossman, who tried for four years to get a bank to refinance a loan on a small strip mall he built five years ago. After being turned down by banks, Mossman saw a direct mail flier for New Mexico Educators FCU and went to the credit union for help. Within a few months, the Albuquerque, N.M.-based credit union helped him refinance the loan. Ralph-David Raby, president of Raby Cos., shared a similar story with the newspaper. He tried to secure loans to renovate 54,000 square feet in two commercial buildings his firm owns. Although Raby had commitments from two banks, he got a loan from New Mexico Educators FCU after seeing the same direct mail flier Mossman saw because the credit union offered a better loan rate than the banks. New Mexico Educators FCU, which has $1 billion in assets, tripled its business loan portfolio to $15 million within the past year. It added two new business loan officers to its staff, the newspaper said. Business loans at New Mexico credit unions grew by 54% in the past year, while the loans decreased by 14% at commercial banks. This means businesses trying to borrow are finding that their financing is drying up, Bill Hampel, Credit Union National Association (CUNA) chief economist, told the newspaper. Of New Mexico’s 50 credit unions, 11 make business loans. Those credit unions have $200 million in outstanding business loans--about 4% of total assets. The average loan size is $240,000, and there is room to grow, Hampel said. Credit unions want to make member business loans, but are capped at making no more than 12.25% of their assets in such loans, Hampel added. Credit unions and CUNA are lobbying to increase the cap to 27.5% of total assets. Sen. Mark Udall (D-Colo.) last week introduced an amendment to a small-business stimulus bill that would raise the cap. Raising the cap will keep money flowing to small businesses, Hampel said. The problem for credit unions is that many slow down their lending when their loan portfolio hits 7% or 8% of assets. When credit unions hit that level, they are a year or two away from hitting the 12.25% cap, and must start rationing loans, Hampel noted.