Leaders In SBA Lending

These credit unions are moving the needle on SBA lending, ensuring small businesses get the financing they need to flourish.

 
 

Established in 1953, the U.S. Small Business Administration (SBA) provides critical financing to small businesses, many of which are supported by credit unions through their field of membership.

According to Peer-to-Peer data from Callahan & Associates, SBA lending is becoming an integral part of the business loan portfolio for credit unions. Since 2010, the outstanding balance of SBA loans has more than doubled from $713 million to $1.6 billion. The average SBA loan is now $253,149, up from $108,058 in 2010.

LEADERS IN SBA LOANS
For all U.S. credit unions | Data as of 12.31.15
© Callahan & Associates | www.creditunions.com

Rank Name State Total Assets $ Small Business Administration
(SBA) Loans Outstanding
1 Mountain America UT $5,077,886,756 $153,136,985
2 California CA $1,463,540,384 $147,571,055
3 Redwood CA $2,827,950,118 $108,592,812
4 Polish National MA $474,066,695 $60,126,011
5 Members Choice TX $494,900,116 $59,048,483
6 Security Service TX $9,237,936,319 $41,072,046
7 Stanford CA $1,894,471,716 $38,818,860
8 Northwest VA $3,093,778,820 $36,574,663
9 Apple VA $2,093,200,255 $34,584,569
10 Achieva FL $1,356,755,896 $33,971,389

Source: Peer-to-Peer Analytics by Callahan & Associates

Currently SBA loans make up 2.8% of the credit union industry’s outstanding business loan portfolio.

For two leaders — Mountain America Credit Union ($5.1B, West Jordan, UT) and Redwood Credit Union ($2.8B Santa Rosa, CA) — SBA loans make up 23.5% and 28.3%, respectively. As of Dec. 31, 2015, these cooperatives are among the top 10 credit unions in dollar volume of SBA loans.

Mountain America Credit Union, Utah

Mountain America Credit Union began SBA lending in 2004 and consistently leads in both total approved loans and total dollar volume of loans. Based in West Jordan, UT, Mountain America increased its SBA program by 4.0% in 2015, hitting $153,136,985 in loans outstanding. 

The credit union’s SBA loan expertise has led it to operate under the SBA’s Preferred Lending Program (PLP) and Express Lender designations. To date, the credit union has 86 branches with numerous contact points that serve small business owners.

In the beginning, Mountain America worked with a CUSO to learn the ins and outs of SBA lending. Its advertising strategy, which included targeting mailings and training calling officers to engage with small business owners, helped it reach scale and bring the program in-house, where the credit union can fully manage the customer experience. 

Mountain America’s recipe for success includes a strong branch and referral network, business development officers with extensive SBA lending experience, and ongoing community involvement. 

“Utah is an entrepreneurial state with many small businesses,” says Mike Turner, senior vice president of lending at Mountain America.  “The economy is growing, with a recent study that ranked Utah as one of the top three states in growth and development. Baby boomers are driving SBA growth as they leave industry professions and become entrepreneurs.”

When asked about lessons learned at the credit union, Turner says, “First and foremost, hire market place experts. Credit unions try to promote from within, which might hurt their business program in the long run. Specialized lending requires a high-level of regulatory experience, which credit unions often lack.”

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Redwood Credit Union, California

Redwood Credit Union began SBA lending in 2008 to serve its many members who own small businesses within the region. Based in Santa Rosa, CA, Redwood Credit Union is a leader in total dollar volume of loans. 

As of year-end 2015, Redwood had $108,592,812 in SBA loans outstanding and top-unit volume in the North Bay area. To date, the credit union has 16 branches and an average member relationship of $20,378, which is $3,398 higher than the national average.

“Sonoma County benefits from positive economic development and growth fueled by hospitality, health care, wine production, and more,” says Ron Felder, executive vice president and chief lending officer of Redwood. “The economy is doing well and has recovered almost all losses from the Great Recession. Despite housing constraints, the region has an optimistic outlook.” 

Unlike Mountain America, Redwood did not partner with a CUSO to spearhead its SBA lending, opting instead to use member intelligence and program investment.

“Small business lending requires a fair amount of research, expertise, and investment,” Felder says. “Once you get to scale, you need the resources to make it right. Control around the member relationship is vital.”

And as for Redwood's lessons learned, the California credit union says it is vital to connect with the community and provide a breadth of lending products and services.

“In the North Bay, banks do not meet the needs of small businesses,” Felder says. “Redwood is a preferred lender of choice. Our 7(a) success comes from serving this community.”

The First Step in SBA Lending

Government agencies are making SBA lending more attractive to credit unions and the members they serve. In February 2015, the SBA partnered with the NCUA to expand business lending to credit union members.  The guaranteed portion of SBA loans do not count toward the business loan cap as a percentage of assets, which encourages credit unions to issue new small-dollar loans.

Visit SBA.gov to learn more about SBA services, including loans, loan guarantees, and counseling sessions. Or check out the National Small Business Week events taking place on May 1-7, 2016, in Atlanta, Denver, Phoenix, San Jose, and Washington, DC.