TRAVERSE CITY, Mich. (6/30/15)--A recent article in the Traverse City Record-Eagle broke down the differences between banks and credit unions, while also digging into some of the major issues the credit union movement faces today, such as the cap on credit union member-business lending (MBL).
David Adams, president/CEO of the Michigan Credit Union League, told the publication that he would like to see the MBL cap raised from its current level of 12.25% of all assets.
The National Credit Union Administration recently proposed a rule change to credit union member-business lending that, NCUA said, would excise prescriptive and arbitrary limits and replace them with a “broad principles-based regulatory approach.”
CUNA has said this plan would be a step in the right direction.
Meanwhile, the recently proposed H.R. 1188 would enable well-capitalized credit unions with demonstrated success in member business lending to more fully meet small businesses’ credit needs by increasing the statutory credit union MBL cap to 27.5% of total assets, according to CUNA.
Raising the cap could result in an additional $16 billion loaned to small businesses in the first year, helping them to create more than 150,000 jobs.
The article also touched on the fact that many credit unions nationwide are nearing the cap, or the point at which they won’t be able to offer additional business loans.
Andy Kempf, president/CEO of 4Front CU, Traverse City, said that the credit union has loaned $18 million to businesses since the credit union began making such loans two years ago.
“If we extrapolate, that means in about four years we will be hitting our cap,” Kempf told the Record-Eagle.