America's credit unions realize significant growth in member business lending.

An unprecedented number of the nation's credit union members have greater access to small business capital through their credit union's participation in the Small Business Administration's (SBA) loan guarantee programs.

Through September 30, 2005, loan production with the SBA through approved credit union lenders has produced 1,172 loans, totaling $122,695,618 in loan guarantees. The average SBA loan approval amount is $104,689. Currently, 253 credit unions are authorized SBA 7(a) loan program lenders.

"The growing demand for small business lending means credit unions are filling a niche needed by emerging and growing small business owners," said National Credit Union Administration (NCUA) Chairman JoAnn Johnson, who has made member business lending a priority during her term. "Credit unions can and are meeting the business lending needs of their members. The doors opened at the SBA for credit unions; and likewise, credit unions are helping their members open the doors to their new small businesses. These not-for-profit financial cooperatives are enabling more Americans to establish small businesses, which create jobs and helps realize a positive economic impact in communities across the country."

"As President Bush has said, 'government does not create wealth; however, the role of government is to create an environment in which people can feel comfortable risking capital and realizing dreams'," said Chairman Johnson.

Consistent with the authority granted by Congress through the Federal Credit Union Act, as of June 30, there are over 1,771 or nearly 20% of federally-insured credit unions providing business lending to their members. With 94,214 total member business loans outstanding, the average loan size was $152,130.

The SBA removed the first barrier in February of 2003, by opening its eligibility rules to allow all credit unions to partner with SBA. Since then, credit union partnerships with SBA have substantially increased.

Last year, the NCUA regional directors were encouraged to consider waivers for credit unions to make SBA 504 loans, which are guaranteed by community-based non-profit organizations. Waivers from loan-to-value limits will allow credit unions to:

* fully fund 504 loans;

* reduce loan turnaround time; and

* better serve small business owners who need to buy real estate, machinery or equipment to expand or modernize their businesses

Also, the NCUA issued a legal opinion letter with new interpretations to make several MBL terms consistent with SBA's 7(a) program--SBA's primary program to guarantee loans for a wide range of business needs. For example, the opinion letter allows credit unions to:

* provide more small businesses with working capital, furniture and fixtures, machinery and equipment, land and buildings, and leasehold improvements;

* extend MBLs beyond 12 years for small business owners investing in fixed assets; and

* prepare to sell SBA loans to the secondary market.

Subsequently, the NCUA Board issued a rule which amends NCUA's collateral and security requirements so that credit unions could make construction and development loans under the safety and soundness standards established by SBA. The amendments permit federally insured credit unions to follow the less restrictive loan requirements of the relevant SBA-guaranteed loan program, with the proviso that state-chartered credit unions have the necessary authority under state law.

Information for this article was provided by the National Credit Union Administration, governed by a three-member board appointed by the President and confirmed by the Senate, is the independent federal agency that regulates, charters and supervises federal credit unions. For more information, visit ncua.gov.