How three credit unions grew loans and helped American workers
MVC Holdings, LLC, a 70-year old automobile seating and trim manufacturer, based in Roseville, Mich., needed to purchase new equipment to expand its manufacturing business. A certified Women Business Enterprise (WBE) company, MVC provides chrome molding to Tesla and Cadillac, and holds 29 patents, giving it a unique advantage in a technically diverse industry.
You wouldn’t normally think of MVC when considering USDA government guaranteed lending programs, but the company did utilize both the USDA and SBA lending programs to help grow their global auto supply business.
Most credit unions aren’t aware of the opportunities available to them by participating in USDA and SBA government guarantee lending programs, which have many types of loans available for a variety of borrowers. The USDA Business and Industry program isn’t just for farmers; it is designed to assist businesses in rural communities across the United States, which can include towns located near major metropolitan areas where there’s enough room to build manufacturing plants.
The SBA has an export loan program designed to help domestic manufactures develop their export business, which in turn helps the United States compete in foreign markets. MVC was able to participate in the SBA export program because they are an international leader in chrome molding, as well as other car components.
This isn’t just a theoretical story about loans credit unions could potentially tap. The $825 million Greater Nevada Credit Union of Carson City, Nev., was the lead lender on these government guaranteed loans. And the credit union angle doesn’t stop there. CU Capital Market Solutions, the CUSO at which I work, assisted Greater Nevada by bringing in other credit unions as participation partners.
The larger of the two loans was a USDA loan totaling $15.5 million. Because of the size of this loan, GNCU, the top USDA lender in the country, was looking for a couple of financial institutions, preferably credit unions, as participation partners. The $563 million Jefferson Financial FCU, based in Metairie, La., funded a substantial portion of this loan. Jefferson Financial’ s VP of Lending Carie Lopez said the loan was attractive because MVC had been successful in the past and was a leader in their industry. She added that unique structure of the export loan, available from the SBA, was another key factor. And, Jefferson Financial has participated in a variety of business loans over the past three years with Greater Nevada.
Mike Doherty, executive vice president of sales at CU Capital Market Solutions, assisted in bringing in a new participation partner, the $503 million Arbor Financial Credit Union of Kalamazoo, Mich. Because of its Michigan location, Arbor Financial was familiar with the industry and liked the company. After completing due diligence with both MVC and Greater Nevada, Arbor Financial decided to fund a significant portion of this loan as well. Kenny Leonard, Arbor Financial’ s VP of commercial & private banking, who was also honored as the 2016 Michigan Commercial Lender of the Year, said, “we are very pleased to take part in a large business loan for a company in Michigan, especially one that manufactures components for such an important industry for our state.”
Jeremy Gilpin, head of commercial lending at Greater Nevada, and the recipient of the 2016 and 2017 USDA Lender of the Year award, said he was excited that more credit unions are realizing the benefit of participating in the USDA Business and Industry program and the SBA Export program.
“Over the past year, more than 1,500 jobs were saved or developed because of these valuable programs,” he said, adding that MVC employs 700 employees in three states.
Not only have credit unions have benefitted from the ability to share member business loans through participations, helping to keep them below their MBL cap levels, but businesses benefit, American workers benefit and the economy benefits. All because of the credit union cooperative spirit.
If you would like to learn more about the USDA and SBA Government Guaranteed Lending Program, and how participating in these loans can help your credit union grow, please contact Bill Mullally at CU Capital Market Solutions. I can be reached at bmullally@cucmsllc.com or at my direct line, 678-960-2905.
