MBL cap is ‘obstacle’ keeping needed funds from businesses

March 24, 2021

The arbitrary member business lending cap is an obstacle keeping needed funds from small businesses, CUNA wrote to leadership of the Senate Committees on Small Business and Banking, Housing, and Urban Affairs Wednesday. Both committees conducted hearings on coronavirus relief legislation.

“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,” CUNA wrote to the committees.

CUNA notes that credit union business lending has increased greatly since the Great Recession, leading to many credit unions being at or near the 12.25% cap.

“We conservatively estimate that even temporarily removing the member business loan (MBL) cap will provide over $5.5 billion in capital to small and informal business ventures, creating nearly 50,000 jobs just over the course of the next year,” the letters read.

CUNA also added that Small Business Administration research shows that the majority of credit union business lending is lending that would not otherwise be made by banks or other entities.

CUNA strongly supports a bipartisan bill from Reps. Brad Sherman (D-Calif.) and Brian Fitzpatrick (R-Pa.) that would exempt COVID-related lending from the cap for up to one year after the pandemic.