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03/17/2009

Best Place For Small Business To Get Loans

Most credit unions didn�t get in on the subprime-loan market, so they�re not hurting like many banks. Many also have extra cash as investors have fled the stock market and put the money into savings accounts. About 27% of the 8,147 credit unions in the U.S. offer business loans, according to the Credit Union National Association, a trade group based in Washington (DC).

The amount of business loans was up 18% last year to almost $33 billion ($28 billion in 2007) and the average loan size is approximately $215,000. A 1998 federal law caps the amount of business loans credit unions can issue�currently 12.25% of assets.

Credit unions hope to convince Congress to raise the limit to 20%, but the banking industry opposes any changes to the legislation. Keith Leggett, a senior economist at the American Bankers Association says credit unions were established to serve �people of modest means� and should focus on consumers.

Credit unions are chartered as nonprofit cooperative institutions owned by their members. Like other financial institutions they are regulated, and deposits are insured up to $250,000.

Credit union officials contend they could provide $10 billion in small business loans within the next 12 months without costing taxpayers a nickel if there was a new higher cap.



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