WASHINGTON—In conjunction with a House Financial Services Committee subcommittee hearing on capital markets, CUNA sent a letter to members of Congress saying new rules and the member business lending cap continue to thwart credit unions’ ability to serve small business.
While credit unions have served small business since being founded more than 100 years ago, CUNA President Jim Nussle said in a letter that “Unfortunately, since 1998, credit unions have been subject to an arbitrary statutory cap on business lending of 12.25% of a credit union’s total assets; as a result, today, many credit unions are rapidly approaching the cap while others choose not to engage in business lending because of the cap.”
The trade group said it continues to call on Congress to allow CUs up against the cap to apply to NCUA for authority to lend up to 27.5% of assets as MBLs.
“This approach, which is targeted toward well capitalized credit unions with demonstrated success in business lending, enjoys the support of the Department of Treasury, which worked with NCUA to help develop proposed legislation,” Nussle said in the letter. “If the cap is not increased, the ability of credit unions at or approaching the cap to help small business-owning members raise capital will be jeopardized. On the other hand, permitting credit unions with experience in business lending to expand lending to their small business-owning members, could result in an additional $16 billion to small businesses in the first year, helping them to create more than 150,000 new jobs.”
CUNA also urged a variety of other policy changes it said will also enhance CUs’ ability to make business loans, including allowing for supplemental capital.