In the last two years tight lending standards and a weak economy have caused small businesses to see reduced lending by banks. As a result, small businesses have turned more to credit unions, according to the Small Business Administration (SBA) in its new report “The Growing Impact of CUs on Small Business Lending.” Highlights of the report include:
- To the extent that reductions are offset, banking consolidation has a less negative effect on small business lending than if credit unions were not in a position to lend.
- Bank business lending was largely unaffected by changes in credit unions’ business lending.
- At a national level, credit unions tend to change their business lending in the same direction as banks – increasing or decreasing their business lending in parallel.
- At the state level, credit union business lending partially offsets bank declines in lending - as banks reduce lending, businesses find loans from credit unions.
- How much credit unions offset declines in bank business lending varies considerably across regions. It’s most pronounced in the south and midwest regions of the United States.
- In the north and west, credit unions tend to go in the same directions as banks.
Read the SBA report on credit union business lending in entirety here.
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