WASHINGTON – CUNA recently hosted a focus group at the suggestion of the Small Business Administration to uncover ways to expand credit union participation in member business and SBA lending. Officials from NCUA; SBA, including General Counsel David Javdan; CUNA; credit unions; credit union service organizations; and CUNA's lending council addressed three main issues during the two-and-a-half-hour meeting: 1) What can the credit union system do to help support proper and appropriate funding for the agency? 2) What are the barriers that now exist to greater credit union participation in member business and SBA loans? 3) What more could be done to reach out to credit unions, as well as to small businesses to let them know credit unions could be an important vehicle for addressing not only their lending needs, but also their deposit and other member needs as well? CUNA Associate General Counsel Mary Dunn termed the meeting “extremely successful.” She added last week, “As a result of that focus group, we will have a letter that's going to NCUA and SBA this week, following up on a number of the ideas that were raised.” The letter was not available as of press time. During the meeting, she said many acknowledged that NCUA has worked hard to remove barriers from its member business lending regulation, but more needs to be done. “[O]ne of the barriers is.that NCUA's requirement on loan-to-value ratio makes it difficult for credit unions to make small business loans that comport with SBA's requirements.” The agency requires an 80% loan-to-value ratio. The credit union representatives also wanted clarifications from NCUA on some of the definitions in the rule, including evaluating a property. For SBA's part, Dunn said, “We really appreciate how SBA is really trying to bring more credit unions in, but it's also true that credit unions are still having problems with the regional offices of SBA.” She explained that some credit unions have complained that the process is taking too long and that when SBA was forced to stop the 7(a) program due to funding, applications that had been in the pipeline for weeks and months were tossed aside. SBA has commended credit unions for doubling their participation numbers, Dunn said, but it is “not nearly what SBA would like to see. They're getting criticism all over the place from the bankers and they would really like to see credit unions move in and fill some of that void that they feel the bankers are leaving or creating.” She added that the bankers meet regularly with SBA and criticize them, particularly for granting credit unions broader participation. Dunn said they also criticized SBA during the Senate Small Business Committee working group last month, where Telesis Community Credit Union President and CEO Grace Mayo represented CUNA. “It's another angle where the banks have this well orchestrated effort to lock credit unions out of whatever enterprise is under the microscope,” Dunn concluded. SBA is also working on preventing another funding crisis as there was earlier this year by taking the 7(a) budget out of Congress' hands. “It's not just funding from now until September.It's also going forward, what is going to be the permanent mechanism,” Dunn explained. “SBA is saying, let's take this out of the budget process, give it a zero subsidy, and then we won't have to worry about an appropriations process. The problem with that though is, if you don't have that funding, then you're stuck with high fees.” Also attending the meeting were Mayo; Steve von Rajcs from Members Business Services CUSO; Brian Gagnon, Newtek Small Business SERvices; Rick Wargo and David Dunn, Pennsylvania League; Bill Meyers, Alternatives FCU, Jim Slamon, Navy Federal Credit Union; and Arnie Gunderson, Boeing Employees Credit Union. -

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