“Expand your Loan Portfolio with Small Business Government Guaranteed Loan Participations” available to CFO Council members

January 23, 2012 | COMMENTS

“Expand your Loan Portfolio with Small Business Government Guaranteed Loan Participations,” written by Margaret Gilbert of Coastal Securities, Inc. is available for CFO Council members to download as a Financial Flash.

Gilbert explains how credit unions of all sizes can employ an investment strategy using secondary market government guaranteed loans to help grow their loan portfolios, address interest rate risk and reduce concentration risk in a safe and cost effective manner with no principal or accrued interest credit risk. Secondary guaranteed loan participations work well for credit unions that want to increase their loans-to-shares ratio as well as for those credit unions that may be near their aggregate lending limits. Gilbert provides a roadmap for credit union CFOs and lenders to evaluate these programs.

The paper discusses the three primary government guaranteed programs and examines the process by which originating lenders sell and credit unions can buy the guaranteed portions of loans made from these programs. Regulations are cited that clearly explain the reasons why small business government guaranteed loan participations are an exception to the statutory and regulatory restrictions that govern traditional loan participations. Processes for evaluating these participations and strategies for managing the associated risk are discussed.

Download a copy of this Financial Flash.