WASHINGTON (9/14/15)--The Small Business Lending Enhancement Act, introduced Thursday in the U.S. Senate, would permit credit unions “to more fully meet the credit needs of America’s small businesses by increasing the statutory member business lending (MBL) cap imposed on credit unions in 1998,” said CUNA President/CEO Jim Nussle, urging passage of the act in a letter to lawmakers.
In a letter Friday thanking S.B. 2028’s sponsors for introducing the measure, Nussle expressed CUNA’s support of the bill and clarified that only Congress can change the statutory cap.
S.B. 2028, which would raise the MBL cap to 27.5% of total assets from the current 12.25%, was introduced in the Senate Thursday by Sens. Rand Paul (R-Ky.) and Sheldon Whitehouse and Jack Reed, both Democrats representing Rhode Island.
“S.2028 is a commonsense economic recovery and job creation measure that would permit credit unions with experience in business lending to continue to lend to their small business members, without increasing the size of government,” Nussle wrote. “If enacted, we estimate that credit unions could lend an additional $16 billion to small businesses in the first year, helping them to create more than 150,000 new jobs.”
With the current cap, “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.”
The legislation is targeted to credit unions with MBL experience and permits only well-capitalized credit unions nearing the current cap and with a history of safe and sound business lending to apply to the National Credit Union Administration (NCUA) for authorization to lend up to 27.5% of total assets, he noted.
Nussle’s letter clarified that NCUA’s proposal to “modernize the antiquated and cumbersome MBL rule” are “welcome changes” that “allow for the installment of modern commercial lending practices and streamline a credit union’s ability to serve their members’ commercial credit needs.” However, NCUA’s proposed rule “does not lift the statutory cap that is currently in place; only Congress, through the passage of S.2028, can accomplish our shared goal,” Nussle emphasized.
“Credit unions understand that in order for the economy to fully recover, small businesses need access to credit, which will help their businesses grow,” wrote Nussle.
“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,” he said.
A similar bill, the Credit Union Small Business Job Creation Act (H.R. 1188), has been introduced in the House by Reps. Ed Royce (R-Calif.) and Gregory Meeks (D-N.Y.).