Banks’ Failure to Aid Small Biz Turns More Attention to CUs
The continued push to raise the member business lending cap for credit unions in light of banks scaling back aid is the focus of an article in the Wall Street Journal.
The $703 million St. Mary’s Bank is one of nearly 300 credit unions near the 12.25% of assets cap with roughly $85 million in loans, the publication noted. Ron Covey, CEO of the country’s oldest credit union, said the Manchester, N.H.-based cooperative has to turn away $1 million to $2 million in small business loans a month.
This, as an October New York Federal Reserve report revealed last summer that three-quarters of small businesses were turned down or received only some of the financing requested, according to the Journal.
The publication also mentioned last year’s efforts by lobbying groups for the American Bankers Association to defeat a bill from Sen. Mark Udall (D-Colo.) that would increase the MBL cap to 27.5%. Udall is planning to file legislation next week to increase the cap to 25%.
CUNA and NCUA data was also cited showing the increase in jobs created if the cap were raised and the growth of business lending among credit unions over the past three years.
Dave Mooney, CEO of the $7.6 billion Alliant Credit Union in Chicago, told the Wall Street Journal the cooperative is moving forward with plans to offer small business loans, including hiring at least two staffers to make it happen. The $2.8 billion Mountain America Credit Union said it has distributed $110 million to small businesses in loans mostly under $50,000. Mountain America Chief Operating Officer Nathan Anderson said if the MBL cap was raised, lending would increase very quickly for the West Jordan, Utah-based credit union.
The Wall Street Journal also mentioned banks such as JPMorgan Chase, which approved more than $10 billion in small business loans in 2010. Still, the volume of new loans has not outpaced those that have been paid or written off, according to the publication.