NEW YORK-Small business lending is slowing at banks, but not at credit unions according to a report that supports the need for the member business lending bill.

Biz2Credit.com CEO Rohit Arora said his firm's research suggests the credit union MBL cap needs to be raised, and that CUs are helping to get small businesses back on their feet. "This is very clear sign that what credit unions are doing is a solution to our economic problems. The biggest opponents of the (MBL) bill have been the small banks (under $10 billion), who see this as more competition. However, one thing our data consistently shows is that if the bill gets passed there is enough demand that everyone will benefit."

In May, CUs' 2012 small business loan approval rate increased to 57.6%-up 0.2% from April and up more than six percentage points than in May 2011.

Small business loan approvals by big banks dropped from 10.6% in April to 10.2% in May.

Small bank approvals fell from 45.9% in April to 45.5% in May. Credit unions' small business loan approval percentage has topped big and small banks from March 2011 through May 2012 (see chart). All the findings are from an analysis of 1,000 loan applications on Biz2credit.com.

The fact CU small business loan approvals are up is the "bright spot" in the economy, stated Arora, who shared concern over the fact big and small banks, after picking up their small business lending activity in the last 12 to 18 months, have cut back over the last few months.

"Big banks have cut back over the last three months and small banks the last two," Arora told Credit Union Journal. "With banks, overall, we may be back to square one."

The poor job reports and problems with the global economy may be contributing to the bank lending slowdown, suggested Arora, who is also concerned about small businesses asking for fewer loans. "Demand is also going down. Small businesses are uncertain about the economy now and there is an increased hesitancy to invest in expansion."

For info: www.biz2credit.com

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