Credit unions: Member business loans seeing substantial growth

Thanks to recent NCUA changes to open up and simplify member business lending.

In Callahan & Associates’ most recent credit union Trendwatch, record high loan originations was one of the highlights of the growth of credit unions’ portfolios, placing the total loan portfolio held by credit unions in the U.S. at close to $900 billion. While auto loans led the growth in percentage terms at 16.8%, a surprising category emerged in second place at 15.5% growth – Member Business Loans. The driver of this come-from-behind category of lending is the recent changes made by the NCUA to open up and simplify member business lending. While some credit unions have jumped on the opportunity created by the changes, many credit unions still have not dove back into granting the type of loans that first created credit unions – member business loans.

History

According to NCUA’s history of credit unions, a court reporter in Quebec, Alphonse Desjardins, in 1900 became aware of loan sharks charging outrageous interest. In response, he organized the first credit union in North America to provide affordable credit to working class families. That credit union was La Caisse Populaire de Levis. A decade later, he helped a group of Franco-American Catholics in Manchester, New Hampshire, organize St. Mary’s Cooperative Credit Association, in part, to provide loans to farmers to purchase livestock, equipment, seeds and other farming needs. These were the first member business loans in the U.S.

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