U.S. Small Business Administration (SBA) Administrator Maria Contreras-Sweet and National Credit Union Administration (NCUA) Board Chairman Debbie Matz signed a Memorandum of Understanding (MOU) to expand and give more small business owners greater accessibility to small dollar SBA loans from credit unions across the country.
“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,” said Contreras-Sweet. “This provides credit unions with the flexibility needed to distribute small dollar loans, increase access to capital to local economies and to enrich 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,” added Contreras-Sweet.
“This is a tremendous opportunity for credit unions and small business owners,” NCUA Board Chairman Debbie Matz said. “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.”
According to SBA’s Region II, Regional Administrator, Kellie LeDet, the partnership between the SBA and NCUA establishes a commitment to credit unions by helping them unlock their capacity to deliver SBA-guaranteed loans. The SBA is making small dollar loans a top priority in efforts to increase business lending and reach to underserved borrowers.
“This new agreement will only help to boost lending in Region II, which serves small business owners throughout, New Jersey, New York, Puerto Rico and the U.S. Virgin Islands,” said LeDet. “During fiscal year 2014, our New Jersey district office approved nine loans for $7 million with three credit unions. The office has agreements with 11 credit unions, so we know that a good source of capital for local small business owners has gone untapped. We certainly believe the potential is there to do more and that this agreement will help open the door to do just that.”
In New Jersey, the SBA has lending agreements already in place with ABCO: Federal Credit Union of Rancocas; Affinity Federal Credit Union of Basking Ridge; Aspire FCU of Clark; Credit Union of NJ of Ewing; Financial Resources FCU of Bridgewater; First Financial FCU of Wall Township; XCEL Federal Credit Union of Bloomfield; Bethex FCU of New York, NY; Bethpage FCU of Bethpage, NY; American Heritage FCU of Philadelphia, PA; and National Institutes of Health FCU of Rockville, MD.
In addition to increasing awareness and providing training to credit union personnel, the SBA’s vast network of resource partners like SCORE, Women’s Business Center and the New Jersey Small Business Development Centers are also available to provide free business counseling and technical assistance to credit union clients.
“This MOU will help boost access to capital to America’s 28 million small businesses and aspiring entrepreneurs,” said LeDet. “Access to capital is and remains a fundamental pillar in starting and growing a business. This announcement is one of the many ways SBA is strengthening its commitment to America’s small businesses and entrepreneurial potential.”Related Articles: