ARLINGTON, Va.—A majority of credit unions said their decision-making and documentation processes for small business lending transactions are "marginally manual," while only 9% have adopted highly automated systems, a new report indicates.
In addition, roughly half of respondents to NAFCU’s latest Economic & CU Monitorsurvey haven't adopted a formal definition for small business lending eligibility.
The latest Monitor details industry and regulatory approaches to small business loan data collection. The Bureau of Consumer Financial Protection is considering how to implement Section 1071 of the Dodd-Frank Act, which could lead to data collection and reporting on lending to small businesses similar to the type required under the Home Mortgage Disclosure Act (HMDA). This section of the law seeks to facilitate enforcement of fair lending laws and help users of the data better identify the needs of women-owned, minority-owned and small businesses, NAFCU noted.
NAFCU said it has urged the Bureau to exempt credit unions from any future rulemaking that would compel lenders to disclose small-business loan information as they are already subject to strict limits regarding member business lending.
Other Findings
The September issue of the Economic & CU Monitor also includes results from the Credit Union Sentiment Index (CUSI), an index based on NAFCU member responses to eight questions on growth and earnings outlook, lending conditions and regulatory burden.
The CUSI declined in September after hitting a record high in August. Results among the four components were mixed. A positive outlook on the economy had the greatest impact on the growth component, and the economy and loan demand had positive impacts on the earnings component. However, loan demand and applicant quality dropped in the lending component and the regulation component fell as well as respondents had more pessimistic views of current and future regulatory landscapes, NAFCU said.