July 15--TRAVERSE CITY -- Michigan credit unions say they've witnessed a significant spike in demand for business loans, particularly from smaller enterprises.
The Michigan Credit Union League & Affiliates report business loans tendered by credit unions in the state jumped from $875 million in 2010 to $1.7 billion in March of this year, representing a 94 percent increase. Local credit unions said their loan trends align with the statewide figures as the Grand Traverse region's economy grows, spawning an increasingly crowded northern Michigan financial services market.
"We are seeing loan growth in both business loans and in consumer loans," said Peg Klein, director of loan operations for TBA Credit Union in Traverse City.
TBA will open a new headquarters in downtown Traverse City in August to accommodate new growth.
"The business loans that we see are generally for smaller businesses," Klein said. "A lot of the smaller businesses are coming to us for help because they are not getting help from ... commercial banks."
Andy Kempf, chief executive officer of Members Credit Union in Traverse City, echoed that contention. He said the credit union just started offering business loans six months ago but officials already notice significant demand for the product. Kempf said loans for small businesses under $1 million are sought most frequently.
"In the last two months four people have to come to me asking for help with business loans, the business loans from $400,000 to $600,000, the loans the banks won't touch," Kempf said. "Usually the banks are looking for $1 million or higher."
"It doesn't price well for them with their overhead," Kempf said.
Kempf said credit unions in the state are working together to share risk on such loans and are selling the debt to one another.
"If I can sell off $200,000 of it, we can have a good rate on the loan without taking too much risk on the books," he said. "We've also had a good uptick in mortgage loans."
Kempf said overall loan growth is up 20 percent this year compared to 2013.
The credit union league said new auto loans from credit unions are up 10 percent in the first quarter of 2014 compared to the year prior. Used vehicle loans rose by 15 percent.
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