Before Henry Wirz, president/CEO of the $2.1 billion SAFE Credit Union in Folsom, Calif., launched the credit union's member business lending operation 15 years ago, he discovered about 3,000 members were small business owners already using the cooperative's financial products to operate their firms.

“What we quickly realized was that we don't have any Fortune 500 employers, so this community really depends on how well small businesses do,” Wirz recalled. “They are the engine of growth. We realized a key function of any community organization was to support small businesses.

Today, the NCUA and SBA are promoting the same message through a new initiative announced earlier this year to encourage more credit unions to offer small business loans. 

Although the number of credit unions providing member business loans has doubled over the last 10 years, only 36% of the nation's financial cooperatives offer MBLs. To encourage more credit unions to enter the this market or expand their small business portfolio, the NCUA agreed to a three-year partnership with the SBA to increase awareness among credit unions about serving small businesses and underserved borrowers.

“Credit unions are always seeking ways to better serve their members and communities,” Debbie Matz, NCUA chairman, said during a small business webinar earlier this year that drew more than 400 participants.

“By expanding small business lending through SBA, credit unions will develop loyal members, enrich their communities and create jobs that further stimulate our nation's economy,” she said. “For all of these reasons, there has never been a better time to consider making SBA-guaranteed loans.”

According to the SBA, there is an emerging opportunity for credit unions to expand the accessibility of small-dollar loans to small business owners in their communities.

“A unique aspect of the SBA and NCUA partnership is that SBA small-dollar loans do not count against credit unions' business loan cap, so they are well suited to expanding access to these loans,” SBA Administrator Maria Contreras-Sweet said. “This provides flexibility to credit unions to distribute small-dollar loans, increasing access to capital to local economies and enriching the entrepreneurial communities which credit unions serve.”

Since 2011, the outstanding balance of SBA loans by credit unions has seen nearly a 50% increase, from $810 million to $1.2 billion, which Contreras-Sweet said signals there is a growing demand for SBA loans.

Indeed, in addition to the improving economy that is encouraging more people to open or expand their small business, one of the fastest growing groups of entrepreneurs in the U.S. is the baby boomers, according to Gallup research released in January. Among adults who don't currently own a business, 12% of boomers said they plan to open a new business, while only 5% of millennials plan to open a shop over the next year.

More importantly, boomers often outpace their younger counterparts in building successful businesses because of their years of professional and trade experience. However, only 9% of baby boomers agree or strongly a agree that it's easy for anyone to obtain a loan to start a business in their city or area, according to Gallup.

This Gallup research means serving baby boomer entrepreneurs could be a growth opportunity or niche market for credit unions. 

So what does it take for credit unions to capitalize on these MBL trends? SAFE CU executives and other experts explain how it's done in the Sept. 23 Credit Union Times Focus Report on emerging markets.