Over the last two decades, small and new businesses have been responsible for creating two out of every three net new jobs in the U.S., and the country’s 28 million small firms today employ 60 million Americans–half of the private-sector workforce.
To ensure that more small businesses have the access to capital they need to build their businesses and hire new workers, we need an all of the above approach to small business lending. And credit unions are playing a growing role in this approach through increased lending.
In fact, member business lending from credit unions has grown in nearly every quarter since the economic downturn.
And there’s an opportunity to build on this momentum. Today, there are an additional 1,000 credit unions that are eligible for low-income designation. This designation exempts a credit union from the cap on small business lending. These loans can play an important role in helping local small businesses grow, hire and support new customers.
These loans can play an important role in helping local small businesses to grow, to hire and to support new customers.
Expanding the number of financial institutions that make small business loans, and increasing the volume of lending by these institutions, is a top priority of the SBA and across the administration. And we encourage more credit unions to consider this designation.
At the SBA, we worked with 13 of the largest lenders to secure a $20 billion commitment to increase small business lending over the next three years. We also brought over 1,000 community banks back to SBA lending.
In addition, we’re opening up our existing SBA product lines to qualified community development financial institutions and we’ve streamlined and simplified loan processes to increase small loan volume. And it should be noted that credit unions benefit from lending with support of SBA’s 7(a) program because the guaranteed portion of the loan does not count against their lending cap.
As SBA administrator, I meet with small business owners and local lenders all over the country. I walk the shop floor of local manufacturers and meet with workers and management. And when you talk to the men and women who built these businesses, they often talk about the relationship and, more importantly, the partnership they have built with their local financial institutions. They talk about how their bank helped them scale their operations, navigate difficult economic times and position them for long-term success.
By expanding small business lending by credit unions we can ensure that more small businesses have the type of partnership that is needed to build successful businesses that serve as anchors of our communities and create good jobs in our neighborhoods.
Karen Mills is administrator of the Small Business Administration.
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