SBA Chief Urges 600-Plus Credit Unions in West to Fund Small Business Investment Programs

SAN DIMAS, Calif. – California credit union officials recently got an earful from SBA Administrator Hector Barreto as he plugged President Bush’s proposals for reforming the Social Security system. Barreto was the keynote speaker at a March 22 VIP reception sponsored by WesCorp and the California Credit Union League. In addition to touting the President’s various private retirement accounts to aid what some have called a system on the brink of collapse, Barreto also encouraged credit unions here to partner with the SBA Express Loan Program. Historically, credit unions have provided predominantly personal loans to members, the league and WesCorp said. SBA officials said expanding into commercial lending by becoming SBA-approved lenders, credit unions can increase the amount of total capital available to businesses for startup and expansion, to include job retention and creation, and become key contributors to real economic resurgence – especially in the Southern California region where business loans are in high demand. The Los Angeles SBA district office has led the nation in collaborating with financial institutions in lending since the mid-1990s, approving 3,000 loans for $1 billion in 2002 alone, according to Alberto Alvarado, SBA District Director in Los Angeles, who also attended the reception. Barrto called on more participation from the more than 600 credit unions in California and Nevada to advance SBA-secured loans to small business entrepreneurs. “The President has said the role of government is to create an environment for small business,” Barreto said. “Tax relief was a part of it. When we lowered the tax rate form 38% to 35%, $75 billion was put in the hands of small business owners.” Barreto said business owners were also helped when deductions were raised from $25,000 to $100,000. By cutting regulatory costs and red tape, they also saved $30 billion, he added. Going forward, the agency is backing a proposal on association health plans (AHPs). The plans would allow small business owners to pool together across state lines so that they can negotiate better rates from insurance companies. “Right now, they can’t buy insurance across state lines,” Barreto said. “Democrats and Republicans have voted in favor of (the plans). The problem is the Senate refuses to take them up for a variety of reasons. We’re hopeful to get a vote on it.” As part of Bush’s “60 Stops in 60 Days” tour, which aims to highlight proposed reforms to the Social Security system, Barreto warned of the adverse changes to come if something isn’t done to turn the system around. “Every year that we wait, it adds $600 billion and by 2018, we will be paying into it much more than we receive,” Barreto said. Small businesses are just as likely to be affected by the current system, he added. Many of them depend 100% on Social Security because they don’t offer pensions or 401(k) plans. Meanwhile, 2005 is expected to be the “best year ever” in the SBA’s history, Barreto said. More than $16 billion is expected to be approved for 7(a) loans and $5 billion for 504 loans. Also on hand at the reception was Bruce Thompson, SBA regional administrator, who shared his first experience of applying for an SBA loan more than 25 years ago. “The application looked like a phone book,” Thompson recalled. “I just needed a loan for $15,000. I went somewhere else. That’s not the SBA today.” Thompson said the SBA Express Loan Program has reduced the application to one page and the turnaround time is much faster. Alvardo thanked WesCorp for its role in launching the first extensive training program in the nation to help credit unions enter the SBA lending program. “The time for credit unions to emerge as potential member business and commercial lenders is now,” Alvardo said. “Mr. Barreto has made it easier to participate and NCUA regulations have also made it easier.” Alvardo acknowledged two MBL heavyweights in the audience: Grace Mayo, president/CEO of $481 million Telesis Community Credit Union and one of the founding members of the highly successful Business Partners, LLC; and Steve von Rajcs, president/CEO of Member Business Services in San Bernardino. Matt Davidson, executive vice president/COO of the California CU League, thanked WesCorp President Bob Siravo for hosting the event. Donna Jimenez, a representative from Rep. David Drier (R-Calif.)’s office, told the audience that the Congressman is a staunch supporter of credit union legislation besides being a member. “No matter what district you live in, you are the ones that will make it happen for the mom and pops that are starting their businesses in their garages,” Jimenez said. -