SBA, NCUA partner to expand small-business lending through credit unions

The U.S. Small Business Administration (SBA) and the National Credit Union Administration (NCUA) have signed an agreement to expand the accessibility of small-dollar SBA loans from credit unions.

Alexandria, Va.–based NCUA is the independent federal agency that regulates, charters, and supervises federal credit unions.

By partnering, the two groups will be able to “increase awareness” about SBA’s loan programs for credit unions and the NCUA, the SBA said in a news release issued Friday.

SBA administrator Maria Contreras-Sweet and Debbie Matz, NCUA board chairman, signed the memorandum of understanding “to invest in America’s entrepreneurial potential.”

SBA small-dollar loans don’t count against credit unions’ business-loan cap, so they are “well suited to expanding access to these loans,” Contreras-Sweet said in the SBA release.

“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 percent increase … from $810 million to $1.2 billion. This signals a growing demand for SBA-loan programs. Millions of Americans have used their credit union to finance their car, home or children’s education. We want to empower credit unions to finance small business start-ups, too,” said Contreras-Sweet.

The SBA is making small-dollar loans a “top priority” in efforts to increase business lending and reach to “underserved” borrowers, the agency added.

The NCUA’s Matz calls it a “tremendous opportunity” for credit unions and small-business owners.

 “SBA-guaranteed loans made by credit unions provide needed capital for existing small businesses and start-ups that might have difficulty obtaining loans from other institutions. With a significant portion of principal guaranteed by the full faith and credit of the United States government, SBA loans rank among credit unions’ safest loans. There is a vast untapped capacity for credit unions to make more SBA loans. This initiative will help us unlock that capacity and put it to work for credit unions, their members and their communities,” Matz said in the news release.