Best Place For Small Business To Get Loans

Most credit unions didn’t get in on the subprime-loan market, so they’re not hurting like many banks. Many also have extra cash as investors have fled the stock market and put the money into savings accounts. About 27% of the 8,147 credit unions in the U.S. offer business loans, according to the Credit Union National Association, a trade group based in Washington (DC).

The amount of business loans was up 18% last year to almost $33 billion ($28 billion in 2007) and the average loan size is approximately $215,000. A 1998 federal law caps the amount of business loans credit unions can issue—currently 12.25% of assets.

Credit unions hope to convince Congress to raise the limit to 20%, but the banking industry opposes any changes to the legislation. Keith Leggett, a senior economist at the American Bankers Association says credit unions were established to serve “people of modest means” and should focus on consumers.

Credit unions are chartered as nonprofit cooperative institutions owned by their members. Like other financial institutions they are regulated, and deposits are insured up to $250,000.

Credit union officials contend they could provide $10 billion in small business loans within the next 12 months without costing taxpayers a nickel if there was a new higher cap.