Member Business Financial Services, LLC (MBFS) was created to assist credit unions in providing services to the local business community in a safe, efficient, and effective manner. Owned by credit unions, MBFS uses that inside perspective to capitalize on the cooperative nature of the credit union movement in helping credit unions provide business loans and other financial services at a cost lower than they could individually. Since its inception in 2008, the CUSO has grown to manage 2,300+ business loans with more than $750 million in business loan balances.
Learn more about opportunities for revenue and growth March 7, at 1 pm ET. Register by emailing contact information to MBFS Webinar.
Business Loan Training and Program Strategic Development
MBFS offers comprehensive training to credit union boards of directors and senior management on a wide variety of topics. Training can be delivered in multiple formats, including online webinars, live video and in-person training. All programs are customized to meet the specific needs of individual credit unions with consulting engagements focused on a wide range of strategic topics, including: loan policy development, operational processes and procedures, sales planning, and risk management.
Credit Union Shared Relationship Managers
A serious challenge for credit union business services programs is hiring and retaining skilled, qualified candidates in a cost-effective fashion. To address this need, in 2015 MBFS began offering credit union clients a Shared Relationship Manager service. In this model, MBFS hires a business lender to work in a geographic market shared among credit unions. Participating credit unions share in new loan originations and may choose to purchase a portion of all loans originated. Coupled with the NCUA’s new business lending regulations, this system allows credit unions to efficiently grow their portfolios of both member and nonmember business loans (the latter of which do not count against the business lending cap).
To learn more about how these products may benefit your credit union, please feel free to contact us at consulting@myleverage.com
- New Loan Credit Analysis
- Annual Reviews
- Portfolio Reviews
- Loan Documentation
- Loan Servicing
- Portfolio Monitoring & Reporting
Q: Is my credit union big enough to do business lending?
A: 70 percent of credit unions over $50 million in assets have at least one commercial loan on the books. That doesn’t include business purpose loans under $50,000 or residential rental properties that do not meet the regulatory definition of a business loan. In 2017, the NCUA also provided small credit unions regulatory relief that are looking to assist members with business-related needs.
Q: What if we don’t have anyone in-house to do business loans?
A: NCUA Regulations permit the use of a CUSO that is independent of the loan transaction to assist the credit union with business lending. Like other vendors, the credit union must conduct due diligence along with understanding risks associated with business lending relative to size and complexity of the loan portfolio.
Q: Are residential rental properties still business loans?
A: Yes and No. In 2018, Congress amended the Federal Credit Union Act so that loans secured with any 1-4 family residential property are no longer classified as a member business loan. However, credit unions must still properly underwrite, close and manage the risk associated with this category of loan. Residential investment property loans have many of the same risk characteristics of business loans and should be managed differently than residential mortgages.
Q: Why are SBA loans so difficult?
A: Loans guaranteed by the Small Business Administration are an excellent way to complement your business lending program and provide financing to the local community. However, unless the credit union has extensive in-house resources and experience in underwriting, closing, and servicing these loans, it can be a frustrating experience. The SBA loan process can be quite different from traditional business loans. It is highly advisable to utilize a third party who specializes in this type of financing to make the process much more pleasant for the borrower and credit union.
Q: Can I buy participation loans?
A: Credit unions can purchase a portion of other credit unions’ business loans as an excellent way to diversify risk, build income, and assist other credit unions. Credit unions purchasing loans need to exercise the same level of diligence in originating and closing the loan as if they were making the loan to one of their members. Participation loans should have the same credit criteria as other loans and should be viewed as a “loan” with credit risk and not an investment.