For many, credit unions are synonymous with local service, personalized care, and community involvement. While this image is accurate, it sometimes leads to a misconception that credit unions can't—or don't—handle large-scale commercial real estate (CRE) loans. However, credit unions can finance significant CRE transactions and are well-positioned to provide competitive terms and flexible options.
At Cooperative Business Services (CBS), we've seen how credit unions redefine perceptions around large CRE lending. Let's tackle some common myths about credit unions in commercial lending and show how they're successfully breaking into "big deals."
Myth 1: Credit Unions Only Fund Small Loans
One common misconception is that credit unions can only finance smaller loans, missing out on larger CRE opportunities. While credit unions do have to adhere to regulatory lending limits, they can handle significant deals. Credit unions can access specialized tools and expertise to confidently evaluate larger, more complex transactions by partnering with experts like CBS.
At CBS, we focus on the nuances of CRE, including evaluating tenants, lease terms, and property financials to provide a comprehensive analysis and loan structure. This support allows credit unions to compete effectively, efficiently, and without compromising their risk management standards.
Myth 2: Credit Unions Can't Compete with Banks on Loan Terms
With their extensive resources, it's easy to assume that banks can always offer more favorable terms. However, credit unions often present highly competitive options, particularly regarding flexible terms and local market expertise. Credit unions prioritize member value and service, which frequently translates into customized loan structures that meet the unique needs of borrowers.
CBS helps credit unions structure attractive loan packages to clients who might otherwise seek financing elsewhere. Our team works closely with credit unions to design terms that address the financial landscape and the borrower's goals, leveraging competitive interest rates and flexible repayment plans. CBS also has a participation network with other lenders who can share in the loan to reduce concentration and exposure while meeting the borrower's needs and providing an excellent return on investment for the credit union and its members.
Myth 3: Credit Unions Lack Experience in CRE Lending
Another misconception is that credit unions need more experience to handle complex CRE transactions. While credit unions may have traditionally focused on personal loans and smaller-scale financing, many have developed robust commercial lending divisions and expertise over the past decade. Furthermore, partnerships with commercial lending CUSOs like CBS provide additional expertise, enabling credit unions to confidently approach even the most intricate CRE transactions.
Our role at CBS is to guide credit unions through every stage of the lending process. From tenant and property evaluation to financial structuring and regulatory compliance, CBS is an extension of the credit union's lending team, adding significant expertise and support. Credit Union Times highlights that collaboration with CUSOs has enabled credit unions to expand their reach in commercial lending.
Myth 4: Credit Unions Don't Have Access to Advanced Lending Technology
Credit unions are sometimes seen as being behind banks technologically. However, many credit unions increasingly embrace digital tools to streamline lending. CBS supports credit unions incorporating advanced tools to evaluate CRE investments, assess risk, and streamline approval timelines.
Credit unions can offer members a smoother, tech-enabled loan process through this partnership. Leveraging technology to assess creditworthiness, manage compliance, and monitor risk enables credit unions to provide a high level of service, aligning with the expectations of today's borrowers. A recent Forbes article emphasizes how digital transformation is critical for credit unions to remain competitive and meet member expectations in today's digital landscape.
Breaking Through the Misconceptions
In today's commercial real estate market, credit unions are proving that they have the resources, expertise, and flexibility to handle large-scale CRE transactions. By working with CBS, credit unions are empowered to compete in the big leagues, offering sophisticated loan products and strong customer relationships.
Conclusion
The landscape of commercial lending is changing, and credit unions are taking their place alongside major players. With CBS's support, they are breaking down outdated misconceptions, embracing innovation, and serving members on a larger scale.
Is your credit union ready to expand its CRE capabilities? Partner with CBS and discover how our expertise can drive growth and success in the commercial lending arena. Contact us today to learn more about building your commercial lending portfolio and empowering your community through big deals.
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