TALLAHASSEE, Fla. (9/9/15)--An article in the Tallahassee Democrat highlights credit unions’ need for a higher member business loan (MBL) cap and describes the benefits such a change would bring to their communities. The article says the statutory cap is stifling lending to small businesses in Tallahassee. 

The Tallahassee Democrat quoted a local businesswoman who had to pay a 20% down payment for commercial lending instead of the more common 10% offered by banks, because her credit union, First Commerce CU, was limited by the 80% loan-to-value rule.

First Commerce CU, the largest credit union in Tallahassee, and Tallahassee-Leon FCU, said the cap should be updated to 27.5% from the current 12.25%, as proposed in federal legislation pending action in the U.S. Congress.

First Commerce has had to turn away small business members seeking credit because of the cap, Carla De Baldo, First Commerce senior vice president and chief sales officer, told the Democrat in the Sept. 4 article. “To me, one time is too many. Someone should never be turned away because of a regulation.”

Mike Akers, vice president of sales and service at Tallahassee-Leon FCU, said in the article that his credit union also is being constrained by the cap. Even if his credit union has the desire to lend and the borrower is well-qualified, “we’re unable to lend to that person because of an arbitrary cap.”

The world has changed since credit unions were first formed, but members and small businesses still need access to capital, said Jared Ross, League of Southeastern Credit Unions senior vice president of associate services and governmental affairs. He told the Democrat that in Florida, lifting the cap would free up $416 million for MBLs and help generate 4,500 jobs.

CUNA, state credit union leagues and credit unions urge Congress to increase the statutory credit union MBL cap to 27.5%. CUNA and the leagues also support a recent proposals for changes to MBL rules proposed by the National Credit Union Administration. To support the proposed changes, CUNA said in its comment letter to the agency, the NCUA should issue guidance and open it to comment before the rule is finalized.