Business Lending Collections Focus of New Lending Council White Paper

CUNA Councils
November 5, 2009 | COMMENTS

A rare confluence of events is occurring in the American economic landscape that offers credit unions once-in-a-lifetime business lending opportunities. Banks and other lenders are restricting credit to established business owners as well as the growing pool of new entrepreneurs laid off from corporate and other jobs during the recession. And there is ample evidence that credit restriction is continuing into the foreseeable future. The CUNA Lending Council recently released a white paper, “Business Lending Collections,” that offers insight into this specialized field of collections.

The research paper contains extensive interviews with credit union lenders to develop a state of business lending and collections in the industry. Also included is information on third party collections, negotiating with business owner members, recognizing red flags, creativity in collections, telephone call tips, and more.

A number of credit unions are viewing the current environment as an opportunity to lend to small business owner members. They are ramping up their business lending portfolios and fine-tuning their business lending collections departments. Business collections—like business lending—succeeds or fails depending on the quality of the relationship developed and nurtured over time.

“The key to effective business lending collections is relationships—how you treat people,” notes Bill Klewin, associate general counsel, CUNA Mutual Group, Madison, Wis. “You have to find people who work well with others, who have exemplary people skills.”

A Fed survey in August 2009 reported that 55% of banks said their lending standards for business loans would remain tougher than long-term average levels until the second half of 2010. In the same survey, one in four banks said they decreased the limits for business credit cards over the past three years. Most bankers said their standards for credit card loans to their best customers would remain tighter than normal into 2011 and longer.

CUNA Council members are entitled to complimentary copies of these and more than 200 white papers; non-members may purchase the white papers for a price of $50 per copy.

The paper is available online in the white paper section of each council site – select the “Lending” tab.