MBL relief would allow small business to access essential CU credit

September 9, 2020

Credit unions are robust business lenders and could do more to help with the pandemic recovery, CUNA wrote to the House Small Business Committee Wednesday for its hearing on transparency in small business lending. Specifically, CUNA reminded the committee that the member business lending cap of 12.25% of assets restricts capital from getting to Main Street businesses in need.

“We urge Congress to enact legislation that exempts credit union business loans made during federally declared disasters and emergencies from the arbitrary credit union business lending restriction,” the letter reads. “Failure to do so would represent a decision to leave critical assistance on the sidelines when small businesses, Main Street, and the nation’s economy need it the most.”

Both the House and Senate have introduced bills to exempt credit union member business loans from the cap for the duration of the COVID-19 pandemic and one year following, which CUNA strongly supports and urged the committee to include in upcoming legislation.

“CUNA conservatively estimates that temporarily removing the MBL cap will provide over $5 billion in capital to small and informal business ventures, creating nearly 50,000 jobs over the course of the next year - at no expense to the federal government,” the letter reads. “Furthermore, additional credit union lending will not impede bank lending activity. A majority of credit union lending does not replace lending that would otherwise be done by banks. SBA research specifically shows that roughly 80% of credit union business loans are loans that banks would not make.”