Demand for Small Business Loans Is Up

"Up" – one of 2009's most popular movies – also describes recent demand for small business loans at credit unions.

According to the Credit Union National Association (CUNA), demand in 2009 for small business loans at credit unions increased 6%, compared with demand at commercial banks.

Businesses are flocking to credit unions for the reasons cited in the August 2009 issue of Kiplinger's Personal Finance magazine: better rates and more personal service than typically offered at banks. The report cited consumers' distrust of banks due to the high fees and tighter lending restrictions they're applying to customers, as well as the financial troubles many banks are experiencing.

According to CUNA, there's wide disparity between what credit unions and banks charge for fees and services. For example, Mid-Atlantic FCU charges $25 for a late credit card payment while the average bank fee is $35. CUNA also notes that credit unions typically offer loans with lower rates and more favorable terms than banks do.

More than 90 million Americans belong to credit unions, according to CUNA, and they save a combined $8 billion a year thanks to better interest rates and reduced fees.

benefits for businesses
In today's economy, it's never been more important for small business owners to keep their costs in check. Credit unions excel at helping businesses find ways to reduce their cost of capital.

Although years ago credit unions did not engage substantially in commercial lending, now it has become common. Recent federal regulatory changes have expanded the commercial lending ability of credit unions.

For example, many credit unions such as Mid-Atlantic FCU are now considered prime Small Business Administration (SBA) lenders. Since the SBA relaxed its limits in 2003 on credit unions' participation in its flagship 7(a) lending program, credit union participation in the program has skyrocketed – to the benefit of business members nationwide.

Unlike many of today's banks, which often base loan decisions exclusively on impersonal mathematical formulas, credit unions take a broader approach, and are more inclined to take intangible factors into account. For example, credit union loan officers often visit the company, get to know the owners, and get a feel for the business and its assets and liabilities in ways that go beyond a balance sheet.

credit unions for personal service
Beyond having ready access to capital, small business owners want to feel like they're heard and understood, and credit unions have succeeded in filling that niche. If you're interested in experiencing the best of credit unions – great rates, low fees and personal service – contact Mid-Atlantic FCU's Director of Business Development, Ron Dimaranan, at 301-944-1767 or Business Development Officer, Eric Myers, at 301-944-1765.