Business borrowers really like credit unions—when they use them.
In fact, credit unions have some of the highest business-borrower satisfaction rates among all types of lenders, according to the Federal Reserve’s latest Small Business Credit Survey. Satisfaction with credit unions was 76% among applicants for new credit. Among small businesses with existing loans, lines of credit and cash advances, credit unions garnered an 85% satisfied rating, higher than the satisfaction rates for small banks, large banks and online lenders.
Despite these figures, only 9% of small businesses sought credit from credit unions last year, according to the survey. And few credit unions are involved in lending programs backed by the U.S. Small Business Administration that cater to small businesses.
Only 178 credit unions, or 3%, were active lenders in the most popular SBA program—the 7(a) loan program—in fiscal year 2018. This is the case despite the fact that SBA lending has gained momentum among small businesses in the past five years. The number of SBA loans by all financial institutions increased 30%, and the approved dollar amount of SBA 7(a) loans jumped 42% (from $17.8 billion to $25.3 billion) during that time period, according to SBA statistics.
continue reading »