Even temporary MBL relief will get capital to businesses

March 10, 2021

The arbitrary credit union member business lending cap is an obstacle for businesses to get capital and should be at least temporarily lifted, CUNA wrote to the House Small Business Committee Wednesday. The letter also notes that despite the Paycheck Protection Program (PPP) receiving additional funds in December COVID relief legislation that more will likely be needed in 2021.

“Looking forward, beyond PPP, small businesses across the country will continue to be in need of funds and credit unions are in a position to pump billions of capital into the economy. There’s only one obstacle: an arbitrary credit union MBL cap which currently limits credit union lending activity to 12.25% of assets,” the letter reads. “Even temporarily lifting the cap will result in more credit union business lending.”

CUNA strongly supports legislation introduced last week by Reps Brad Sherman (D-Calif.) and Brian Fitzpatrick (R-Pa.) that would exempt disaster related loans from the MBL cap during and for up to one year after the declared national emergency.

“We conservatively estimate that temporarily removing the MBL cap, this legislation will provide over $5.5 billion in capital to small and informal business ventures, creating nearly 50,000 over the course of the next year,” the letter reads.

CUNA also notes that additional credit union lending will not impeded bank activity, instead Small Business Administration research shows that roughly 80% of credit union business loans are loans banks would not make.