WASHINGTON (3/4/15)--A bill that would allow credit unions to increase their member business lending (MBL) will be a boost to the economy, CUNA President/CEO Jim Nussle said Tuesday.
"Credit unions understand that in order for the economy to fully recover, small businesses need access to credit, which will help their businesses grow," Nussle wrote. "Credit unions have capital to lend, a history of prudent and safe small business lending, and a mission to help provide access to credit to their members--including their small business-owning members. They just need Congress to enact your legislation."
Credit unions are currently limited to member business lending up to 12.25% of assets, but if the bill is passed, it could raise the cap to 27.5% of assets for credit unions that meet certain conditions.
"Today, many credit unions are rapidly approaching the cap while others choose not to engage in business lending because of the cap," Nussle wrote. "If the cap is not increased, the ability of many business-lending credit unions to help small businesses will be jeopardized."
CUNA estimates that if the bill is enacted, it would allow credit unions to lend an additional $16 billion to small businesses in the first year, helping to create more than 150,000 new jobs.
The bill, identical to a CUNA-supported bill introduced in the last Congress, would amend the Federal Credit Union Act. Currently, credit unions are prohibited from member business lending exceeding 12.5% of assets, or 1.75 times the actual net worth of the credit union.
Credit unions could lend up to 27.5% of assets if: outstanding member business loans have been at or above 80% of the 12.25% cap for the last year; it is considered well-capitalized; it has had an MBL program for at least five years; and it receives permission from the National Credit Union Administration.