Is your credit union protected from rising rates?

Here are five factors to consider when building a proactive monitoring strategy for small business lending.

The Fed’s recent rate hikes to curb inflation—combined with the rippling economic impacts of the pandemic and ongoing supply chain issues—are just a few of the complexities credit unions must navigate when it comes to member business lending. These issues will certainly have implications for credit union teams manage portfolio risk. Given the current state of the economy, credit union leadership should not settle for the status quo when it comes to portfolio risk management.

Consumers and small businesses are feeling the squeeze from inflation and rapidly rising interest rates. High prices and higher borrowing costs have significant impacts on consumer spending and therefore on small business income. To mitigate delinquencies and financial instability, it is crucial for credit unions to have a solid understanding of where potential problems may arise for their small business members before they negatively impact portfolio performance.

How can credit unions shift from a portfolio monitoring approach that’s traditionally reactive to a more proactive approach? To get an earlier indication of challenges before they pose a real threat, there are five factors to consider.


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