WASHINGTON – Although there were a record number of memberbusiness lending startups in 2004, the loans still only capture asmall percentage of the loan portfolio. MBLs account for only 2.7%of all credit unions' loan portfolios, according to Callahan &Associates, Inc. But as of the third quarter of 2004, they grew onaverage 23% for the industry over 2003 to reach $11 billion. Thereare currently nearly 84,000 loans and of the 1,985 CUs with morethan $50 million in assets, 32 started business lending programslast year. Credit unions are not walking into MBL programs blindlyas evident by the experienced lending staff they're hiring, notedTom Geggel, industry analyst at Callahan. “Determining how to staffthe business lending program is critical to its success,” Geggelsaid. “While federal regulations require officers to have at leasttwo years of experience in commercial lending, most employees havea banking background with several years of experience. Severalcredit unions also have ongoing training programs for employees.”While business loans have a 60 basis point higher delinquency ratethan the overall loan portfolio, the gap is shrinking from a highof 200 basis points in 2001, Geggel pointed out. However, withproper underwriting and selection of the loans, business loans arestrong investments, he added. “Before moving ahead with a businesslending program, credit unions need to develop institutionalsupport, hire the right staff and account for risk factors,” Geggelreiterated.