Big banks have long dominated commercial lending, leveraging vast resources, extensive networks, and automated systems to attract business borrowers. Their ability to process loans quickly and offer competitive rates has made them the default choice for many commercial lending investors and business owners. However, recent challenges in the banking sector have created opportunities for alternative lenders.
As big banks face increasing credit constraints and tighten their lending standards, businesses seek alternative financing sources, opening the door for credit unions to expand their role in commercial lending (Forbes). Credit unions can significantly expand their commercial lending footprint by leveraging syndication and diversifying deal sources, such as direct borrowers, real estate professionals, attorneys, and mortgage brokers.
Moving beyond reliance on brokers allows credit unions to build a well-rounded lending portfolio, minimize risk, and strengthen long-term community partnerships. With the right strategy and support, credit unions can compete with larger financial institutions and position themselves as a trusted alternative for commercial borrowers.
The Challenges Credit Unions Face in Commercial Lending
Expanding into commercial lending can seem daunting for credit unions due to several perceived challenges:
- Regulatory Lending Limits – Credit unions must navigate member business loan (MBL) regulations that cap commercial lending at a percentage of assets.
- Limited Capital and Infrastructure – Unlike larger financial institutions, credit unions may lack the internal resources to service and underwrite large-scale commercial loans.
- Competition from Big Banks – Traditional banks often process loans faster and offer lower rates due to their extensive financial backing and automation.
Despite these challenges, credit unions are uniquely positioned to serve commercial borrowers with a more tailored and community-focused approach. With the right strategies—particularly through syndication and diversified deal sourcing—credit unions can build a strong presence in commercial lending.
Expanding Lending Capacity with Syndication
One of the most effective ways credit unions expand their commercial lending capabilities is through loan syndication, where multiple credit unions work together to fund larger commercial loans. Syndication provides key advantages:
- Increased lending capacity by pooling resources, enabling credit unions to fund high-value projects without exceeding regulatory limits.
- Risk mitigation by sharing a loan among multiple institutions, protecting financial stability.
- Portfolio diversification by participating in various commercial loans, minimizing concentration risk.
At Cooperative Business Services (CBS), we facilitate syndication opportunities that allow credit unions to expand their loan portfolios beyond their lending limits while maintaining responsible risk management.
How CBS’ SBDO Program Strengthens Loan Syndication and Unlocks Growth
The CBS Shared Business Development Officer (SBDO) program empowers credit unions to expand their commercial lending reach through strategic loan syndication and diversified deal sourcing. By leveraging multiple referral sources, credit unions can access high-quality lending opportunities while reducing reliance on brokers. Through the SBDO program, credit unions can:
- Expand Deal Flow & Diversify Sources – Access a steady pipeline of commercial real estate (CRE) loans from direct borrowers, real estate professionals, attorneys, and mortgage brokers.
- Strengthen Risk Management – Evaluate tenant credit grades, lease terms, and financials to ensure high-quality, sustainable lending decisions.
- Collaborate for Larger Loans – Partner with other credit unions to syndicate larger CRE deals, mitigating risk while expanding lending capacity.
- Scale Efficiently & Sustain Long-Term Growth – Maintain a well-balanced, diversified loan portfolio without overextending resources.
Diversification is more important than ever, as total loans outstanding in federally insured credit unions increased by $41 billion, or 2.6 percent, over the year ending in the third quarter of 2024, reaching $1.63 trillion (NCUA). This significant growth highlights the need for credit unions to expand their lending capacity strategically while maintaining a well-balanced and diversified deal flow.
By leveraging multiple referral sources and syndication, CBS ensures that credit unions are not overly reliant on brokers and can access a steady stream of high-quality commercial lending opportunities that align with their long-term growth strategies.
How CBS Enhances Credit Union Lending Success
CBS’ syndication platform offers several advantages to credit unions looking to expand their commercial lending footprint:
1. Access to High-Quality Loan Opportunities
CBS connects credit unions with carefully vetted commercial loan opportunities from various industries and professionals. Our underwriting team ensures these loans align with each credit union’s lending criteria and risk tolerance.
2. Comprehensive Underwriting and Risk Management
Our advanced risk assessment process evaluates key factors such as:
- Debt service coverage ratio (DSCR).
- Loan-to-value (LTV) ratios.
- Market conditions and property value trends.
- Tenant creditworthiness and lease stability.
By conducting thorough due diligence, CBS helps credit unions make data-driven, informed lending decisions that support financial growth.
3. Streamlined Compliance and Portfolio Management
Navigating commercial lending regulations can be complex. CBS provides:
- End-to-end compliance support to help credit unions align with industry regulations.
- Ongoing loan servicing and performance monitoring to ensure financial health.
With CBS handling many of these back-end processes, credit unions can focus on relationship-building and business development rather than administrative burdens.
4. Competitive Loan Pricing and Member-Centric Solutions
Big banks often prioritize profits over personal service, but credit unions have an opportunity to stand out by offering flexible, borrower-focused lending solutions. CBS enables credit unions to structure competitive loans that meet the specific needs of business owners, real estate investors, and professional partners.
Winning in Commercial Lending: A Strategic Approach
Credit unions that embrace a diversified, partnership-driven lending strategy can effectively compete with larger financial institutions. By working with CBS, credit unions can:
- Expand their commercial loan portfolios while maintaining responsible risk management.
- By incorporating multiple referral partners, reliance on any single deal source, including brokers, is reduced.
- Offer competitive, borrower-friendly terms that attract new business.
- Strengthen their relationships with businesses and real estate professionals while supporting community economic growth.
The key to success is to move beyond traditional lending models and embrace an ecosystem of diverse deal sources and strategic partnerships.
Step Confidently into Commercial Lending
As the commercial lending environment shifts, credit unions have a clear opportunity to grow—without going alone. Strategic syndication and thoughtful deal sourcing can unlock new potential, but the key lies in having the proper infrastructure and guidance to navigate it effectively.
That’s where CBS comes in. Working alongside credit unions, we help identify high-quality opportunities, clearly manage risk, and support sustainable growth in the CRE space. Whether you're refining an existing strategy or entering new markets, our platform is built to scale with your goals.
Ready to strengthen your commercial lending strategy?
Contact us today to learn how CBS can help you grow with confidence.
Disclaimer. The information and data contained in this multimedia content (the “Content”) are provided for informational purposes only, and do not necessarily represent the views or opinions of Cooperative Business Services, LLC (“CBS”). The Content, and the appearance of the Content on, by or through CBS’ website, email, or technological infrastructure does not constitute an endorsement by CBS, its affiliates, owners, officers, directors, or employees (or their successors and/or assigns). Information in the Content cannot be relied upon by any recipient for any business, legal or financial decisions.
