Entrepreneur’s Journal: Can’t get a business loan? Try a credit union
Posted Oct 19th 2008 6:30PM by Tom Taulli
Filed under: Small business
At many banks, there is a freeze on new loans to small businesses. True, with the recent governmental measures, things should loosen up. But it’s going to take time.
Unfortunately, many businesses need money now.
So, what are some alternatives? Well, one idea is to visit your local credit union.
A credit union is a not-for-profit financial institution which is owned and managed by its members (that is, the depositors and borrowers). There are roughly 8,300 credit unions across the nation with more than 90 million members.
Credit unions tend to be managed fairly conservatively, with little exposure to complicated investments like derivatives and subprime loans.
Okay, so how do you become a member? Basically, each credit union has its own criteria, which may be based on occupation, geography, association and so on. Keep in mind that many credit unions allow family members to join. Thus, if your mother is a member, you’ll probably be allowed to join. (You can click here for a credit union finder).
As for the loan process, it is similar to the traditional approach. “With current turbulent financial markets, a loan is likely to get more scrutiny than say a few years ago, but credit unions are in still in the market and lending,” said Bill Hampel, who is the chief economist for the Credit Union National Association. For information on the loan process, you can check out a recent Entrepreneur’s Journal column entitled “Using an SBA loan to buy your dream business.”
According to Hampel, there are some other things to consider:
Credit unions tend to be careful lenders, so they require full documentation on loans.
About 24% of the nation’s credit unions offer member business loans.
The average loan size is $180,000.
Tom Taulli is the author of various books, including The Complete M&A Handbook and The Streetsmart Guide to Short Selling: Techniques the Pros Use to Profit in Any Market. He is also the founder of BizEquity, a valuation website
Hope this helps someone, George Mills