Portfolio Analytics

Credit Unions want to lend more to SMB’s

From Credit Union Times: Congress will Again Take Up Business Lending, Consumer Bureau and Deficits

Credit Unions are lobbying to loosen regulations that cap the amount of SMB lending they are allowed to carry. The fact that some banks are claiming to be turning down worthy businesses because of regulation is a little disturbing, especially given the government is at the same time trying to encourage lending to SMB’s. Having robust methods for understanding SMB portfolio credit risk is crucial to ensuring that regulations maintain sensibility and effectiveness.

The WAIN Street Business Credit Health Index (BCH Index) is a piece to this puzzle. Especially when looking at smaller institutions, having an external third party method to ‘sanity check’ the regulatory restrictions imposed is enormously important. Why should a blanket cap be applied to ALL credit unions when each business loan portfolio has a wide range of risk profiles. Everything from region, to industry, to a credit union’s own underwriting practices can affect the risk of the portfolio; setting a conservative across the board cap that effects everyone is leaving money on the table that could be going to mid-market and small business.