Best Practice Analysis of Business Lending Credit Unions

The National Federation of Community Development Credit Unions provides safe and responsible financial services to underserved communities. Since 1974, the Federation has been promoting financial inclusion by organizing, supporting, and investing in community development credit unions (CDCUs). Today, CDCUs face significant hurdles in developing a sustainable business lending division due to high costs and insufficient information. A Capstone team was tasked to provide CDCUs with best practices of top-performing business lending credit unions and small banks, encouraging them to grant loans to small businesses. Through the analysis of financial data, the team’s report identified top-performing business lending credit unions and small banks. Additionally, the report included a best practice analysis in order to make operational recommendations for improving CDCUs’ business lending capacity. The report also compared growth projections of CDCUs that have not yet developed business lending operations with credit unions that have done so successfully.