MBL rule in Federal Register: New NCUA video highlights benefits

March 15, 2016

WASHINGTON (3/15/16)-- The National Credit Union Administration (NCUA) released a video resource for credit unions on its member business lending (MBL) rule in concert with the publication of that rule in Monday's Federal Register.

The video toolkit highlights how member business lending, managed correctly, can benefit credit unions, their members and their communities.

The MBL rule was adopted in February, and the bulk of it is set to go into effect on Jan. 1, 2017.  The exception is a provision that waives a personal guarantee requirement. The Credit Union National Association (CUNA) worked closely with the NCUA to ensure an accelerated effective date for that waiver--set at 60 days after the rule's publication in the Federal Register, which is May 13.

CUNA has noted that the accelerated waiver will serve to give faster regulatory relief to credit unions from the loan guarantee burden, while the 2017 effective date gives them needed time to implement changes, under the new rule, in their own MBL programs.

CUNA has praised the NCUA’s MBL rule modernizations for stripping all restrictions not specifically laid out in the Federal Credit Union Act. The result, CUNA believes, gives credit unions greater flexibility and autonomy in the way they offer member business loans.

Other changes in the final rule include:

  • Giving credit union loan officers the ability, under certain circumstances, to not require a personal guarantee;
  • Replacing explicit loan-to-value limits with the principle of appropriate collateral and eliminating the need for a waiver;
  • Lifting limits on construction and development loans;
  • Exempting credit unions with assets under $250 million and small commercial loan portfolios from certain requirements; and
  • Affirming that non-member loan participations do not count against the statutory member-business lending cap.