Credit union remains important for small businesses in the US, as they provide capital for business expansion and other purposes, according to a Small Business Administration (SBA) report.
If your business operates in Utah, Wasatch Peaks Credit Union notes that applying for SBA loan in Ogden or Salt Lake City from a credit union is normally easier than doing so from banks and other large financial institutions. Hence, the report suggested that an increase in lending limits could be beneficial for small enterprises.
More Lending Activity
Credit unions currently follow a 12.25% cap on lending their total assets in business loans to members. SBA said that these financial service providers account for $60 billion of lending activity for small businesses between 2008 and 2016.
On the contrary, bank loans to small enterprises fell by almost $100 billion in the same period. Rebel Cole, the report’s author, believes that small businesses’ improved access to capital will be the key to a full recovery from the financial crisis.
If you are planning to get an SBA loan, there are several things you need to remember before submitting an application.
SBA Loan Requirements
Most small business owners believe that the SBA directly issues a loan to them. In reality, the SBA partners with lending institutions and credit unions to lend you the money. There is also a higher chance of approval since the SBA acts as a guarantor for a portion of the borrowed funds.
The most common types of SBA loans include SBA 7(a) and SBA Microloans. Non-profit and community groups normally issue microloans worth up to $50,000. The loan amount for an SBA 7(a) might be worth up to $5 million, which will be used for bigger expenses such as refinancing debt or working capital.
Small businesses play an important role in the US economy, so increasing the lending limits from credit unions could be a good solution to support further economic growth.