There is an axiom in the basic training within any commercial lending program that usually states something like "tomorrow's cash pays today's loan." What that means is that we need to understand what a credit's cash flow will be like in the future instead of just assuming the past success or failure will continue. It goes without saying that when a credit union reviews the past few years' financials of a potential business loan, it may encounter wild swings and anomalies. These could be swings in either direction as far as income and the balance sheet go. Let's take a minute to review some recent trends with credit unions and business lending to see how your program may need to adjust in the future.

A Blockbuster Year, Despite the Pandemic

First and foremost, 2020 was a blockbuster year for credit union business lending and there appears to be no easing in 2021, according to most reports. Per NCUA Call Report data, the number of commercial loans funded by credit unions compared to 2019 was up by 12% with the dollar amount of commercial loans funded last year up by 22%. These numbers are outside of the SBA PPP loan program and are quite amazing when you consider that for a few months during the early days of the pandemic, new loan activity was virtually non-existent. Commercial loans purchased as participations grew year-over-year by an astounding 36% as many credit unions sought outlets for increasing liquidity.