Catching the wave of home inspections that accompanied the recovery of the housing market, Francisco Calderon found himself in need of another truck, another employee and more capital for marketing programs at his Reno-based Mega Pest Inc.
His answer: A loan guaranteed by the Small Business Administration and arranged through Great Basin Federal Credit Union, one of the credit unions that are becoming increasingly aggressive players in small business lending in northern Nevada.
While credit unions long have made business loans to their members, two factors spurred them deeper into the sector since the onset of the financial crisis in 2008, says Larry Palochik, senior vice president of member solutions for the Nevada Credit Union League.
On one hand, credit union members who lost their jobs during the recession decided to create their own small businesses — and they turned to the credit unions with which they had longstanding relationships for loans.
Credit unions, meanwhile, need to find good loans to put their deposits to work. As consumers continue to be cautious about borrowing, small business lending is an attractive option.
“I don’t run into many credit unions that wouldn’t want to make more loans in this environment,” says Palochik.
Five out of the 11 credit unions that do business in northern Nevada are involved in business lending.
Greater Nevada Credit Union, the Carson City-based institution that’s the largest credit union in the region, has booked about $8 million in business loans since it got back into commercial lending in May. (It had launched a business-lending operation seven years ago, but got out of the business with the onset of the recession.)
Jeremy Kilpin, vice president of business services for Greater Nevada, says the institution projects that it will add about $15 million annually in commercial loans to its portfolio. Its loan portfolio, which totaled about $266 million at the end of June, is currently dominated by mortgages and auto loans.
Greater Nevada makes business loans ranging from $10,000 to $1 million, and it has even larger loans in its pipeline, Kilpin says.
“There has been a large demand for commercial lending in northern Nevada,” he says.
Credit unions, he says, are filling a gap in the market left by the acquisition or failure of numerous community banks in the region during the recession.
“Credit unions are filling that void,” Kilpin says. “We can provide the level of customer service that a small business owner needs.”
It wasn’t surprising that Calderon turned to Great Basin Federal Credit Union to finance expansion of the company he’d launched two years ago as a one-man-and-a-truck outfit. His wife, Veronica, works at the Reno-based credit union, and the couple had multiple relationships as depositors and borrowers with Great Basin.
When Great Basin won approval this spring to begin making commercial loans guaranteed by the Small Business Administration, Calderon was among the first to begin the painstaking process of applying for an SBA loan.
Jennifer Denoo, vice president and chief operating officer of Great Basin, says applicants for the new SBA lending program at the credit union now range from an entrepreneur planning a service station to the owner of a horse-boarding business.
She says demand for SBA loans was strong within weeks after Great Basin got approval to begin the government-guaranteed lending program.
A workshop about SBA lending drew responses from 50 members of the credit union within three days after it was announced.
The credit union relies on an outside consulting firm to provide underwriting expertise on SBA loan applications. Calderon says the level of detail required in the application sometimes tried his patience — especially because he was handling daily operations of Mega Pest at the same time.
But he says the work has proven worthwhile as the firm already is landing more business.
