The NAFCU Journal September-October 2019 - 12

CAPITAL FOR BUILDING
COMMUNITIES
The SBA works with credit unions - and
other lenders - to provide loans to
small businesses. Most SBA-guaranteed
loans have rates and fees comparable to
those of nonguaranteed loans, and some
come with ongoing support for businesses just getting off the ground. Other
benefits of SBA-guaranteed loans include
lower down payments, flexible overhead
requirements and, in some situations, no
required collateral.
While a variety of loans are available
through the SBA, the primary program for small businesses is known as

The CUSO
Partnership
F

For small businesses needing to invest
in property or hard assets, the SBA
offers the 504/CDC loan, which pairs
a lending credit union with a certified
development company (CDC) - a
third-party nonprofit lender certified
and regulated by the SBA. The 504/
CDC loan creates a lending partnership,
wherein the borrower typically provides
10 percent of the equity, the lender
provides 50 percent, and the participating CDC contributes the remaining
40 percent. Given the strength of this
partnership, 504/CDC loans can extend
up to $20 million.

William Manger, associate administrator of the Office of Capital Access for
the SBA, says the 7(a) and 504/CDC
lending programs are very important to
the work of the SBA and provide more
than $30 billion a year in capital to small
businesses. "Many small businesses don't
have access to loans in general," he says.
"Without the lenders making loans using
our guarantee, many small-business
loans likely wouldn't happen."

SBA SUCCESSES
Maldonado has seen the value of the SBA
loan programs firsthand in many success
stories of RBFCU members utilizing the
SBA program. He recalls one small-business owner of a health and wellness
center who, after 10 years in business,
wanted to expand but was having difficulty getting conventional financing.

or credit unions just beginning to
serve small-business members, it
may make sense to work with a credit
union service organization (CUSO)
to help handle SBA and commercial loans, says Natasha Merz, vice
president of commercial lending at
Langley Federal Credit Union.

Randolph-Brooks Federal Credit Union
(RBFCU) has been involved in commercial lending since 2005, according
to Senior Vice President of Business
Solutions Mike Maldonado. "In a typical
year, we probably handle more than 150
commercial loans," he says. "About 10
percent of those are SBA loans."

That small-business owner came to
RBFCU armed with six years' worth
of financial information and a detailed
business plan. He was clearly capable,
with a history of success in the community. "The RBFCU team went to work
for him to help obtain an SBA 7(a) loan
for new construction," Maldonado says.
"He recently held a grand opening for
his expanded facility thanks to the SBA
program and our staff."

"Commercial lending is highly specialized lending that requires specific
expertise in order to be successful,"
she says. "Partnerships alleviate some
of the biggest challenges and give
you time to explore and understand
commercial lending."

The support of SBA capital makes loans
possible for borrowers who otherwise
would not qualify for a traditional loan.
That is an important benefit, Maldonado
says. But, he stresses, that doesn't mean
he expects the SBA to mitigate a bad
loan risk. "We look to the SBA program
to mitigate a borrower's inexperience or
their collateral weaknesses - any shortfalls with the credit package."

Another success story is one that Maldonado says speaks to the culture of San
Antonio, where RBFCU is based. The
owner of a family-run restaurant came
to the credit union after more than a
decade of service with traditional loans.
After leasing for years, the family was
ready for the next step: to start construction on their own building. "They
had an established clientele - and

A CUSO can, essentially, serve as
your out-of-house loan department.
"They'll present the loans to you,
train your loan officers, and help
you start a commercial-lending
department without making a heavy
investment," she says.
In addition, Merz points out, they can
bring you loans tailored to your risk.
"This is especially important because
even though a CUSO can be a
full-service provider, the credit union
still carries the risk."

12

7(a) - with its variant, 7(a) Express,
also being highly popular. The 7(a) loan
provides working capital (and revolving
lines of credit) of up to $5 million. The
7(a) Express loan, as its name suggests,
offers an accelerated turnaround time for
SBA review, along with a maximum loan
amount of $350,000.

''

The SBA supports the
small-business community.
That's pretty much what credit
unions do. The SBA and credit
unions' missions are aligned.

''

- NATASHA MERZ, VICE PRESIDENT OF COMMERCIAL LENDING,
LANGLEY FEDERAL CREDIT UNION
THE NAFCU JOURNAL  SEPTEMBER-OCTOBER 2019



The NAFCU Journal September-October 2019

Table of Contents for the Digital Edition of The NAFCU Journal September-October 2019

The NAFCU Journal September-October 2019
Contents
Conferences
From the Chair
Washington and Industry Briefs
The Bottom Line
Access to Money
The Best Indirect Growth Strategy
Big Moments, Bigger Wallet Share
Executive Spotlight
Management Insight
Compliance Central
Inside NAFCU Services
Industry Perspectives
From the President’s Desk
The NAFCU Journal September-October 2019 - The NAFCU Journal September-October 2019
The NAFCU Journal September-October 2019 - Cover2
The NAFCU Journal September-October 2019 - Contents
The NAFCU Journal September-October 2019 - 2
The NAFCU Journal September-October 2019 - Conferences
The NAFCU Journal September-October 2019 - From the Chair
The NAFCU Journal September-October 2019 - 5
The NAFCU Journal September-October 2019 - Washington and Industry Briefs
The NAFCU Journal September-October 2019 - 7
The NAFCU Journal September-October 2019 - The Bottom Line
The NAFCU Journal September-October 2019 - 9
The NAFCU Journal September-October 2019 - Access to Money
The NAFCU Journal September-October 2019 - 11
The NAFCU Journal September-October 2019 - 12
The NAFCU Journal September-October 2019 - 13
The NAFCU Journal September-October 2019 - 14
The NAFCU Journal September-October 2019 - 15
The NAFCU Journal September-October 2019 - The Best Indirect Growth Strategy
The NAFCU Journal September-October 2019 - 17
The NAFCU Journal September-October 2019 - 18
The NAFCU Journal September-October 2019 - 19
The NAFCU Journal September-October 2019 - 20
The NAFCU Journal September-October 2019 - 21
The NAFCU Journal September-October 2019 - 22
The NAFCU Journal September-October 2019 - 23
The NAFCU Journal September-October 2019 - Big Moments, Bigger Wallet Share
The NAFCU Journal September-October 2019 - 25
The NAFCU Journal September-October 2019 - 26
The NAFCU Journal September-October 2019 - 27
The NAFCU Journal September-October 2019 - 28
The NAFCU Journal September-October 2019 - 29
The NAFCU Journal September-October 2019 - Executive Spotlight
The NAFCU Journal September-October 2019 - 31
The NAFCU Journal September-October 2019 - Management Insight
The NAFCU Journal September-October 2019 - 33
The NAFCU Journal September-October 2019 - Compliance Central
The NAFCU Journal September-October 2019 - 35
The NAFCU Journal September-October 2019 - Inside NAFCU Services
The NAFCU Journal September-October 2019 - 37
The NAFCU Journal September-October 2019 - 38
The NAFCU Journal September-October 2019 - 39
The NAFCU Journal September-October 2019 - Industry Perspectives
The NAFCU Journal September-October 2019 - 41
The NAFCU Journal September-October 2019 - 42
The NAFCU Journal September-October 2019 - 43
The NAFCU Journal September-October 2019 - From the President’s Desk
The NAFCU Journal September-October 2019 - Cover3
The NAFCU Journal September-October 2019 - Cover4
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