FOM expansions, MBL relief increases financial inclusion
CUNA wrote to the House Committee on Small Business ahead of Wednesday’s “Examining the Role of Community Development Financial Institutions and Minority Depository Institutions in Small Business Lending” hearing to express support for the Expanding Financial Access for Underserved Communities Act. Credit unions’ field of membership restrictions and the member business lending cap shut out those that need access to mainstream financial services.
“One of the most important things that Congress could do to promote financial inclusion and help small businesses would be to ensure that federal law permits all federal credit unions to serve underserved areas,” the letter reads. “Under current law, only multiple common bond credit unions are eligible to add underserved areas to their field of membership. In addition, credit unions are also arbitrarily restricted in the amount of business lending that they can provide to 12.25 percent of assets. Lifting that cap would ensure small businesses would be able to access the capital they need.”
CUNA supports the Expanding Financial Access for Underserved Communities Act because it would:
- Allow all federal credit unions to add underserved areas to their field of membership;
- Exempt business loans made by credit unions to businesses in low-income areas from the credit union member business lending cap; and
- Expand the definition of low-income credit union to include any area that is more than 10 miles from the nearest branch of a financial institution.