U.S. Small Business Administration Administrator Maria Contreras-Sweet and National Credit Union Administration Board Chairman Debbie Matz signed a Memorandum of Understanding to invest in the nation’s entrepreneurial potential by expanding the accessibility of small dollar SBA loans from credit unions.
By partnering, the two groups will be able to increase awareness about SBA’s loan programs for credit unions and the NCUA, the organizations said Monday.
“A unique aspect of the SBA and NCUA partnership is that SBA small dollar loans do not count against credit unions’ business loan cap, so they are well suited to expanding access to these loans. This provides flexibility to credit unions to distribute small dollar loans, increasing access to capital to local economies and enriching the entrepreneurial communities which credit unions serve,” said Contreras-Sweet.
Since 2011, the outstanding balance of SBA loans by credit unions has seen nearly a 50 percent increase — from $810 million to $1.2 billion, she said.
“This signals a growing demand for SBA loan programs. Millions of Americans have used their credit union to finance their car, home or children’s education. We want to empower credit unions to finance small business start-ups, too,” Contreras-Sweet added.
This partnership between the SBA and NCUA establishes a commitment to credit unions by helping them unlock their capacity to deliver SBA-guaranteed loans. The SBA is making small dollar loans a top priority in efforts to increase business lending and reach to underserved borrowers. Once a loan is approved, the SBA has a vast network of resource partners such as SCORE, Women’s Business Centers, and Small Business Development Centers to offer free counseling and technical assistance to help small business owners deploy their working capital and grow their businesses and revenues.
“In Puerto Rico’s economy, more people are approaching credit unions to help meet their financial needs,” said SBA District Director Yvette T. Collazo. “Locally there are a significant number of credit unions, some of which have joined SBA’s roster of authorized lenders. We look forward to welcoming many more and continue expanding access to credit for our small business owners.”
An additional benefit of this partnership is that it expands access to capital to encore entrepreneurs, individuals planning to start a business after earlier career endeavors. The average age of credit union members is 47 and the fastest-growing group of entrepreneurs consists of men and women age 50 and above, spurred by the low cost of starting a successful small business in the Internet age.