Credit unions vital to success of small businesses
Establishing and retaining a relationship with a credit union is the best way for a small business entrepreneur to receive essential financial services, CUNA wrote to the House Small Business Committee Tuesday. The committee heard testimony from Isabella Cassilas Guzman, head of the U.S. Small Business Administration.
“Credit unions recognize that financial inclusion and access to capital for entrepreneurs are critical to ensuring the growth and development of vibrant small businesses,” the letter reads. “As not-for-profit, consumer-owned financial cooperatives, credit unions have a laser focus on our mission of financial inclusion and serving our members.”
CUNA also reiterated its support of the Expanding Financial Access for Underserved Communities Act, which would:
- Allow all federal credit unions to add underserved areas to their field of membership
- Exempt business loans made by credit unions in low-income areas from the credit union member business lending cap.
- Expand the definition of a low-income credit union to include any area that is more than 10 miles from the nearest branch of a financial institution.
CUNA also noted its opposition to the SBA becoming a direct lender.
“This public private partnership [between the SBA and financial institutions] works as borrowers are able to obtain loans from financial institutions that they know well and that have vested interests in their borrowers’ success,” the letter reads. “Furthermore, when working with local lenders, small businesses are likely to benefit from guidance and experience from a lender with a stake in helping the borrowing business succeed.
“By becoming a direct lender to small businesses, the SBA is likely to harm local financial institutions’ relationships with businesses and possibly hamper these businesses from establishing important banking relationships that can only help their business survive and flourish,” it adds.