Diversifying Your Business Services Program Pays Off in Many Ways



If your credit union is like most CUs, you’re part of a commercial lending evolution. Gone are the days when commercial real estate lending was the main name of the game. Diversification is what it’s all about nowadays. These tips and strategies will help you spread your business lending wings.

According to a recent CU Business Group poll, credit unions engaging in business lending are turning the corner in expanding and diversifying their business services programs. This is a positive trend for the industry as well as for small businesses.

At CU Business Group’s 2016 National Conference in Portland, Oregon, the 150 attendees were asked “What is your credit union’s #1 growth strategy for business services?” (Fig. 1). Of those responding, 54 percent stated that growing commercial real estate (CRE) lending remains a major focus. Although this is still over half the credit unions, it represents a sea of change in the mindset of credit unions that are engaged in business lending. Roughly a decade ago, an estimated 80 percent to 90 percent of these credit unions were solely focused on CRE lending.

The recent poll also shows that credit unions are now placing more emphasis on offering loans for business operations (commercial and industrial, or C&I), at 19 percent, and on establishing full-service deposit relationships (growing core deposits), at 15 percent. Another 12 percent of respondents are primarily focused on purchasing participation loans to achieve growth objectives.

The fact that almost half of credit unions surveyed now recognize the tremendous opportunity for growth outside CRE illustrates that there is a greater appetite to diversify commercial lending and expand deposit programs.

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