For Metro Vancouver business owners, a clear trend is emerging: BC credit unions have grown their commercial loan books faster than the Big Five for three consecutive quarters, according to Central 1 Credit Union's Q1 2026 figures. This sustained growth indicates that businesses are increasingly finding success with local credit unions after facing rejections from larger national banks.
BC's credit union system now holds more than $90 billion in assets, making it one of the largest provincial ecosystems in Canada. These institutions have evolved beyond community-focused services, maintaining sophisticated commercial lending desks that are increasingly willing to underwrite risks that Schedule A banks now decline.
This shift is reflected in both loan volumes and business sentiment. The Canadian Federation of Independent Business has tracked a measurable rise in SME primary banking relationship switches toward credit unions between 2024 and 2026. Business owners cite loan approval rates, relationship continuity, and local decision-making as the primary drivers for these moves.
Local decision-making is central to this trend. When a small manufacturer in Burnaby applies for a $400,000 equipment loan at a major bank, the adjudication often occurs at a centralized office in Toronto, assessed against standardized risk models. In contrast, a BC-based commercial lending team can often engage directly with the business owner, allowing for a more nuanced assessment of the company's specific circumstances.
Major players, including Vancity, Coast Capital, and First West Credit Union, have expanded their commercial operations. Vancity's commercial loan portfolio has grown significantly, particularly in working capital and equipment financing for businesses with annual revenue between $1 million and $15 million—a segment often overlooked by larger financial institutions.
Conversely, Office of the Superintendent of Financial Institutions data on Schedule A bank SME lending shows a tightening of commercial credit, particularly for businesses lacking significant hard-asset collateral. Rising provisions for credit losses in 2025 led many banks to adopt more stringent adjudication criteria.
Credit unions are capitalizing on this gap as a strategic move to deepen SME relationships. While most credit unions operate under provincial regulation—overseen by the BC Financial Services Authority—Coast Capital is federally regulated. Regardless of the regulator, these institutions are leveraging their ability to structure loans with greater flexibility.
For Metro Vancouver operators, this creates a clear path for financing. Seasonal businesses in construction, hospitality, and food production may find better terms for working capital lines. Similarly, businesses in sectors deemed higher risk by traditional models—such as specialized manufacturing—often find more receptive partners at credit unions for loan sizes in the $250,000 to $5 million range.
While credit unions remain disciplined in their underwriting, the difference lies in their willingness to engage with complex files rather than relying on automated decline queues. For SMEs that have been turned down by a traditional bank, a conversation with a credit union is a logical next step.
What to watch:
- Central 1's Q2 2026 commercial lending figures: A fourth consecutive quarter of outperformance would confirm this as a durable structural shift.
- Institutional commitment: Further expansion of commercial lending teams at Coast Capital and First West would signal long-term strategic focus.
- OSFI guidance: Any shift in how Schedule A banks approach SME lending provisions could alter the competitive landscape.
- BCFSA sector health reports: Monitoring whether commercial loan growth is matched by appropriate capital reserves remains essential for long-term stability.
