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March 16, 2012 – NAFCU-member credit unions are making loans to small businesses, but the current member business lending cap is preventing them from doing more, according to data from NAFCU's latest Economic and CU Issues Monitor.

The Monitor'sMarch edition (login required), released Thursday, says 10.3 percent of survey respondents reported turning down loans to small businesses over the last 12 months due to cap restrictions. It says 13.8 percent of respondents have been forced into a loan participation arrangement to stay under the MBL cap.

The data also show that demand for member business loans has been picking up. One-fourth of the survey respondents have seen an increase in demand for Small Business Administration loans in the past 12 months. More than half (53.6 percent) said applicants have specifically asked for SBA loan products.

The MBL cap also discourages hiring in a direct way, the data show, with 3.6 percent of respondents indicating they have been prevented from hiring staff dedicated to business lending over the past 12 months.

The survey also reaffirms that credit unions are using SBA loans to fulfill their unique niche in the marketplace. More than two-fifths (40.6 percent) of respondents' SBA loans are less than $50,000, while more than two-thirds (67.9 percent) are less than $200,000.

On average, credit unions have just over $113,000 in outstanding SBA loans. Survey respondents' average SBA portfolio came in at over $1.7 million, the survey showed.