Business lending for credit unions presents great opportunities–it also presents some significant challenges. Saying "yes" to members for larger real estate transactions can be quite lucrative, but that "yes" carries considerable credit risk. Commercial real estate loans are often in the $1-$10 million range, and that is a lot for many credit unions to take on. In addition, with these larger-sized loans, other hurdles may immediately come into play. They include:

• A lack of liquidity, which many credit unions may be facing.
• The "loans to one borrower" limitation. This limits total business loans to one member to 15 percent of the credit union's net worth.
• A high loan-to-share ratio, which may make a large business loan less attractive.
• The cap on total member business loans, which is 12.25 percent of total assets–many credit unions are coming close to this cap nowadays.

Even if your credit union can overcome the above hurdles, it is still not smooth sailing. You have to offer pricing and loan terms that are highly competitive, and have the expertise to originate and service the loan, as well as the relationship. So, while these large loans are attractive, they are certainly less than easy to execute.

A new ballgame–private label business lending.

A private label business lending program works similarly to the consumer mortgage industry, where the credit union originates the loan and the loan is immediately sold to an investor on the secondary market. However, commercial lending is far more specialized than consumer mortgage lending, therefore only a handful of commercial programs are available today that fit the credit union industry.