SBA Hot Topic Tuesday — SBA Partners with Credit Unions to Increase Small Dollar Loans

February 17, 2015

By Bob Coleman
Editor, SBA Hot Topic Tuesday

SBA continues to emphasize its “small” loan initiatives with credit unions.

Says Administrator Contreas-Sweet, “A unique aspect of the SBA and NCUA partnership is that SBA small dollar loans do not count against credit unions’ business loan cap, so they are well suited to expanding access to these loans. This provides flexibility to credit unions to distribute small dollar loans, increasing access to capital to local economies and enriching the entrepreneurial communities which credit unions serve. Since 2011, the outstanding balance of SBA loans by credit unions has seen nearly a 50 percent increase – from $810 million to $1.2 billion. This signals a growing demand for SBA loan programs. Millions of Americans have used their credit union to finance their car, home or children’s education. We want to empower credit unions to finance small business start-ups, too,” said Administrator Contreras-Sweet.

Add NCUA Boar Chair Debbie Matz, “This is a tremendous opportunity for credit unions and small business owners. SBA-guaranteed loans made by credit unions provide needed capital for existing small businesses and start-ups that might have difficulty obtaining loans from other institutions. With a significant portion of principal guaranteed by the full faith and credit of the United States government, SBA loans rank among credit unions’ safest loans. There is a vast untapped capacity for credit unions to make more SBA loans. This initiative will help us unlock that capacity and put it to work for credit unions, their members and their communities.”

The announcement added this interesting note.

“An additional benefit of this partnership is that it expands access to capital to encore entrepreneurs, individuals planning to start a business after earlier career endeavors. The average age of credit union members is 47 and the fastest-growing group of entrepreneurs consists of men and women age 50 and above, spurred by the low cost of starting a successful small business in the Internet age.”