June 25, 2013

Biz lending growing faster at CUs than banks

June 26, 2013 – While The Washington Post reports a decline generally in small-business lending, credit unions are increasing loans to small businesses and doing so even as banks pull back on such lending, according to data analyzed in NAFCU's first-quarter CU Industry Trends report.

During the recession, credit unions' MBL growth slowed but maintained a positive trend throughout the period. In 2008, credit unions grew their MBL portfolios by 23 percent as banks grew their business lending 3.3 percent. Banks' small business lending slipped into negative growth after that and they are still recovering.

"Business lending from federally insured credit unions rose 1.4 percent in the first quarter of 2013 and grew 6.2 percent since March 2012," said NAFCU Chief Economist David Carrier. "And while bank loans to small business have shrunk 14.3 percent since mid-2007, credit union MBLs have grown 77.7 percent."

These trends in credit union vs. bank lending are supported by the 2011 study of the Small Business Administration's Office of Advocacy, which found that credit unions' small-business lending tends to fill the gap when bank lending declines during financial downturns.

NAFCU refers to this study and credit union industry data in pressing for passage of H.R. 688 and S. 968, legislation to increase credit unions' MBL authority as urged in NAFCU's five-point plan for comprehensive regulatory relief for credit unions.

The CU Industry Trends report, produced by NAFCU's research team, provides an in-depth look at MBL growth by region and asset class as well.