NCUA Signs Agreement to Encourage SBA Lending

NCUA will be working with the U.S. Small Business Administration to increase greater participation in SBA loan programs among credit unions.

Fewer than one in 10 credit unions participate in SBA’s guaranteed lending program, with credit unions holding less than 2% of the $132.3 billion in outstanding SBA guaranteed loans as of March 31.

The NCUA announced Tuesday it had launched a three-year collaborative effort by signing a memorandum of understanding “to undertake a series of initiatives that will help credit unions better understand and make use of SBA-backed loans and resources. These joint initiatives may include webinars, training events, and media outreach.”

The NCUA declined to provide a copy of the agreement.

Credit unions held 6,532 SBA commercial loans worth $2.1 billion as of Dec. 31, 2018, up 15.2% from a year earlier. The average SBA loan was about $316,000, with SBA guaranteeing about 58% of the principal.

SBA lending is typically an activity of larger credit unions.

The median asset size for the 415 credit unions offering SBA commercial loans was $572 million at the end of 2018, compared with $125 million for the 1,487 credit unions that held commercial loans but no SBA loans.

NCUA Board Chairman Rodney E. Hood said the announcement’s timing — a week before National Small Business Week — provided an “opportunity to highlight SBA-guaranteed loans as another tool for credit unions to support small businesses and foster economic growth in their communities.”

“Credit unions are well-situated to understand and work with their local businesses and entrepreneurs to extend affordable credit,” he said.

SBA Acting Administrator Chris Pilkerton said the partnership with the NCUA will increase awareness of SBA programs among credit unions.

“Small businesses are the drivers of America’s economic growth and we want to ensure they are equipped with the tools they need for success,” Pilkerton said. “I look forward to our two agencies collaborating on shared best practices, educational initiatives, and increasing our support of current and future entrepreneurs.”

Among the SBA lenders, commercial loans made up 9.1% of total loans, and SBA loans made up 4.8% of their commercial portfolio.

The largest SBA lenders at the end of 2018 were:

• Mountain America Federal Credit Union, Salt Lake City ($8.2 billion in assets, 796,578 members) held 373 SBA loans worth $164.7 million, up 47.8%.
• Redwood Credit Union, Santa Rosa, Calif. ($4.5 billion in assets, 253,758 members) held 270 SBA loans worth $159.2 million, up 23.8%.
• Apple Federal Credit Union, Fairfax, Va. ($2.7 billion in assets, 209,467 members) held 71 SBA loans worth $78.5 million, up 12.7%.
• Members Choice Credit Union, Houston ($589.1 million in assets, 38,154 members) held 70 SBA loans worth $51.6 million, down 22.4%.
• Alaska USA Federal Credit Union, Anchorage ($7.7 billion in assets, 664,502 members) held 66 SBA loans worth $45.8 million, up from just $5.2 million a year earlier.