In 2007, the chairwoman of the House Committee on Small Business introduced legislation that would exempt the nonguaranteed portion of the Small Business Administration's 7(a) loans from counting against credit unions' 12.25% of assets member business lending cap. She has consistently backed the Community Development Financial Institutions Fund and supports community development credit unions as a means of providing financial services to the underserved. Just last month, the Credit Union Association of New York presented Vel?zquez with its Legislator of the Year award recognizing her efforts to rally credit unions to have a voice in Washington on small business matters.
A member of Congress since 1993 who also serves on the House Financial Services Committee, Vel?zquez most recently backed the passage of the American Recovery and Reinvestment Act of 2009, working to ensure that small businesses have access to affordable credit and new capital. Credit Union Times recently spoke with Vel?zquez on renewed efforts to raise or eliminate the member business lending cap and the role credit unions can play in contributing to the economic recovery.
Credit Union Times: As you know, CUNA, NAFCU and others within the credit union industry have pushed hard to either eliminate or raise the 12.25% of asset cap on the dollar amount of business loans that credit unions can issue. Given the economic times we're in, how confident are you that Congress will be more amenable to at least raising the cap to 20% of assets?
Nydia Vel?zquez: Credit unions have a vital role to play in our economy and in promoting our nation's economic recovery. In the coming months, I expect Congress will look at a number of options that would allow credit unions to further increase their involvement in small business lending. Raising the asset cap is one idea that has been floated, and it has received a significant amount of discussion. The recent crisis among large financial institutions has further underscored the importance of credit unions to our economy, and I expect you will hear other proposals discussed for increasing credit union participation in the business lending market.
CU Times: The number of credit unions offering Small Business Administration 7(a) loans continues to grow. You have been a longtime supporter of this loan program. Is it doing enough for small businesses or would you like to see it doing more?
Vel?zquez: Right now, our small businesses can use all the help they can get. The SBA needs to find ways to encourage more financial institutions to participate in all of its lending programs, not just the 7(a) program. This means finding ways of speeding the delivery of loans and having on-site specialists who can facilitate the SBA lending process. This is an area in which the [House Committee on Small Business] will remain engaged in coming months.
CU Times: Many credit unions are saying small businesses are now turning to them for the first time ever for capital needs in light of banks scaling back access. How important is it for credit unions to seize this opportunity to woo small business owners?
Vel?zquez: Credit unions have an important role to play offering established small businesses and aspiring entrepreneurs a path to capital. As the economic crisis continues to unfold, we are increasingly finding that smaller financial institutions that are anchored in their communities are well-capitalized and are able to continue making loans. By helping credit flow to entrepreneurs, credit unions can contribute to the nation's economic recovery.
CU Times: During his election campaign and after being inaugurated, President Barack Obama proposed several initiatives to bolster small businesses. How do you feel about some of his proposals and is he doing enough?
Vel?zquez: The president has moved swiftly to help small businesses weather this storm. He is working aggressively to implement the small business lending provisions that were included in the American Recovery and Reinvestment Act.
By increasing the amount of a loan that SBA can back, we make it easier for lenders to lend and small businesses to borrow. Similarly, the president moved quickly to make SBA-backed loans more affordable for lenders and borrowers. These are critical steps, but more will need to be done. What is most important is that, in the short term, by moving swiftly, the President has sent a clear message to entrepreneurs that he recognizes they will be central to our nation's economic recovery.
CU Times: In your talks with small business owners, what are they saying about their most difficult and pressing challenges?
Vel?zquez: The single biggest challenge facing small businesses at this point in time is access to affordable credit. Our committee has heard first-hand how a combination of restricted lending and tightening credit is blocking small businesses from growing and contributing to an economic recovery, so restoring the flow of credit is crucial for healthy commerce. That is why I am pleased the president has moved so swiftly to enact the small business lending provisions contained in the American Recovery and Reinvestment Act.
CU Times: As chairwoman of the House Small Business Committee, what are the top pressing issues in front of you that impact small businesses?
Vel?zquez: Just as this economic crisis did not begin over night, we know more must be done to help entrepreneurs driving growth where our prosperity begins, with Main Street businesses in communities across the country. Our committee will continue working to ensure elements of the American Recovery and Reinvestment Act dealing with small business lending are properly implemented. The recovery act will generate a massive new influx of federal contracting work, and the Small Business Administration must fulfill its responsibility of ensuring small businesses are able to compete for their fair share of contracts.
As the nation's innovators, small businesses are at the forefront of the new green economy, and investments in the recovery act will foster entrepreneurial developments creating new jobs, while reducing the nation's dependence on foreign oil. With small firms struggling under spiraling health care costs, health care reform will also be a major issue for the committee. The president has made health care a priority, and we need to make sure we tackle this issue in a way that is sensitive to entrepreneurs' needs.