A spokesman for NCUA has confirmed that loans a credit unionmight make in partnership with Kiva.org, an online organizationthat allows individuals to invest in development micro-loans aroundthe world, could still count against their cap on member businessloans.

Credit union are precluded by law from lending more than 12.25%of their assets in member business loans (except for CDCUs andcertain other credit unions). Kiva has launched two efforts to fundmicro-loans in the U.S. and the most recent one, in New Orleans,involves a credit union, ASI Federal Credit Union, as it fieldpartner.

The MBL cap question arose in regard to Kiva lending becausewhile a credit union might initially fund a Kiva loan, and collectsinterest from it, the loan is “backfilled” by Kiva investors andthus does not represent CU funds past a short initial period.

“As long as the loans are for a business purpose they would besubject to the provisions of NCUA Rule 723 Member Business loans,”wrote NCUA spokesman David Small in an email response to an inquiryabout the issue. “The length of time the loan is outstanding doesnot impact the classification, even if it is only outstanding for ashort period of time.”

But Small also noted that the size of the loans might also keepthem from being included in a the cap for most CUs.

“723 contains an exclusion to the Rule if the aggregateoutstanding loan balances, including the new financing, for theborrower an associate members are less than $50,000,” Small wrote.“In this situation that may be the case as the funding is formicro-credit loans,” he added, but emphasized that the $50,000calculation is based on the entire business loan relationshipbetween the CU and the member and that borrowers receiving Kivabacked loans would still have to be credit union members.

Kiva has said it is open to working with other credit unions aswell.