Business Lending Group Adds New Participant - Pioneer CU

NEENAH, Wis. – Ever since it was formed three years ago, Business Lending Group has been content to be a small, regional company. That strategy hasn’t changed even though the CUSO that was formed three years ago to provide business lending services to the members of three credit unions has grown by one new participant. BLG President David Coggins inked a deal with Pioneer CU, Green Bay, Wis. on August 15, and at press time he was in the process of planning the implementation of the agreement. Tom Young, president/CEO of Pioneer said the deal was “set to go” on Oct. 1. He said BLG plans to hire a business lending officer for the Green Bay area. Pioneer, which has $190 million in assets and 36,000, joins Prospera CU (formerly Banta Community CU), Menasha; CitizensFirst CU, Oshkosh; and Fox Community CU, Appleton which cooperatively founded BLG in March 1999 and opened its doors for business three months later. Coggins said BLG never has had any designs or model to be a national business lending CUSO, “although that doesn’t mean it couldn’t happen sometime in the future.” But for the past three years, the CUSO has been content to participate business loans among the three owning credit unions for their members. As of July 2003, Business Lending Group was managing $130 million in loan volume for the three credit unions. Coggins admitted that since its founding in 1999, BLG has received several invitations to expand, but he said the CUSO turned down the offers because `we wanted to stay focused on our members and their market.” But when Pioneer approached BLG, Coggins considered the CU’s offer because Green Bay is close to the cities where the other three credit unions are located and he said it was a good opportunity for the CUSO to expand. “A lot of our members’ businesses have branches in Green Bay and we get a lot of referral accounts from realtors that have clients in both cities,” said Coggins. “We’ve been hard pressed until now to serve those members. Having Pioneer join the CUSO will allow us to serve them.” Three years ago, when BLG was formed, that would have been easier said than done. That’s because at the time the Wisconsin Bankers Association argued that the creation of Business Lending Group violated state law, and the WBA, along with AnchorBank in Madison and F&M Bancorporation in Kaukauna, filed an appeal to the Wisconsin Credit Union Review Board. The appeal argued that the Wisconsin statutes stated that services provided by a credit union corporation, such as BLG, were limited to “services associated with the routine operation of credit unions and credit union organization,” and since “commercial loans” was not a service commonly associated with the “routine operation” of credit unions, it was not within the limits of the law. Credit unions are exempt from paying state and federal taxes because they were formed by the government to serve the little person – people who would otherwise have limited access to basic financial services, said Harry Argue, WBA’s EVP/CEO at that time. Credit unions, he said, did not receive their tax-exempt status so they can compete for business loans with taxpaying financial institutions. In December 1999, the Credit Union Review Board dismissed the bankers’ complain. Since then, BLG has facilitated making and underwritting business loans for the three credit unions to their members for a variety of small businesses purposes. The average loan size is about $300,000. Pioneer’s Young said the credit union did a “negligible amount” of business lending before it entered into the agreement with BLG, and most of that involved “dabbling” in business real estate. It’s also offered business checking accounts. The credit union even participated in some loans from BLG. But as the largest credit union in the county, Young said he knew Pioneer needed to be more involved with business lending, and he immediately considered Business Lending Group because “we know how they work, and they’re a success story.” Less than one week after BLG and Pioneer signed their agreement, Coggins was busy making sure the credit union understood all the CUSO’s systems issues and details of the BLG’s processes. He said his intention was to keep everything seemless as possible as things unfold. “I’m concerned about operational issues,” said Coggins. “When we have businesses interested in dealing with us, I want to make sure we don’t wind up tripping on operational details.” – [email protected]