April 12, 2013

Why Credit Unions Rely on Small Businesses...and Vice Versa

Comment April 12th, 2013 By Becky 

As the years have passed, 74 years to be exact, Triangle has expanded its membership to not just the employees and families of the original local business, but throughout five counties of New Hampshire and four counties of Massachusetts. Today’s assets are nearing $500 million with over 40,000 members… and it all started with small business.

A study completed by the Small Business Association in 2011 concluded that credit union loans to small businesses had risen “substantially” since 2001 by three main measures:

  1. As the amount related to loans and assets
  2. Relative to community banks
  3. Relative to Small Business loans at all banks

The resulting data from the report also showed that as larger banks began lending less frequently, credit unions began supporting small businesses in response, off-setting the lost loans by nearly half.

In recent years, credit unions have pushed a bill to help increase their business loan limits (the maximum amount they can lend to businesses). Today, credit union small business lending is limited to 12.25% of the institution’s assets. The Credit Union National Association (CUNA) believes a bill like the one proposed could help add 140,000 small business jobs by making it easier for small business owners to obtain financing.

As the bill continues to struggle at the hands of Congress, and the issue has been volleyed for more than 15 years, the lending ceiling placed on credit unions has affected local economy. With the current limitations for lending to the local business community, there are more empty storefronts than may have been with an increased limit. Triangle wants to continue lending to bolster the cities and towns of our members, to give opportunity to the entrepreneurs among us, and to strengthen the tightknit cooperative community. Large banks have quietly challenged the bill, concerned that credit union lending will extract from their profits, in-turn hindering credit union ability to provide financial assistance and services to those who might otherwise not have the opportunity to borrow.

These days, it can be challenging to get financing through traditional means. This challenge is met within small, locally-run, cooperative credit unions.Together credit unions and small businesses are working to get the local economy on track. As local businesses borrow from credit unions, they are in turn helping to serve their community. That’s why credit unions were born – to serve their membership. And as a credit union who believes in social responsibility, we find lending to local small businesses is another opportunity to work with our community.

Credit unions depend on their membership to select the Board of Directors and ultimately make decisions for the institution. With a membership of local residents and area businesses, we all share common interests in our community as well as the financial stability of the institution. The members, both individuals and businesses, are at the helm.

Becky – eCommerce Manager

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