Sen. Mark Udall (D-Colo.), primary sponsor of S.2231, which would increase the member business lending cap to 27.5% of assets, received loud cheers as he spoke in favor of the legislation to about 500 gathered in Washington Nov. 27 to hike the hill in favor of the bill.
Udall told the credit union executives, small business owners and members of Congress squeezed into the Kennedy Caucus Room at the Senate Russell Office Building that banker arguments opposing the bill are “flat-out wrong.” And he added that the MBL cap is a drain on the economy because “we know small businesses aren’t able to generate the loans they need from the banking sector.”
Rep. Ed Royce (R-Calif.), who is the primary co-sponsor of H.R. 1418, the House companion bill for member business lending, also took the podium to hearty applause and cheers. He told the crowd the bill isn’t about banks versus credit unions or Democrats versus Republicans but, rather, an opportunity to boost the economy without having to borrow money from overseas.
Rep. Suzanne Bonamici (D-Ore.), Rep. John Larson (D-Conn.), Rep. Gerald Connolly (D-Va.), Rep. Brad Sherman (D-Calif.), Rep. Paul Tonko (D-N.Y.) and Rep. Steve Stivers (R-Ohio) also addressed the group. A surprise guest was Rep. Spencer Bachus (R-Ala.), chairman of the House Financial Services Committee, who didn’t speak but was given rock star treatment by those wanting to shake the hand of the powerful congressman. Rep. Jeb Hensarling (R-Texas) was selected by GOP leadership Wednesday to serve as the 2013 chairman, succeeding Bachus, who has served the maximum six-year term as either chairman or ranking minority member.
Several business owners who had been denied loans by banks were also in force at the event, invited by the credit unions that extended them much needed credit.
Roger Moore, a small business owner from Knoxville, Tenn., owns a commercial real estate management and sales firm. After two banks asked him to move his business elsewhere in 2009, despite no late or missed loan payments, he joined the $1.4 billion ORNLFCU of Oak Ridge, Tenn., where he was able to secure an SBA loan.
“My banker at Regents Bank called and asked to meet with me about my line of credit,” he said. “I had heard about people having their lines of credit pulled, but I was still surprised when he asked me to move my accounts elsewhere.”
Moore said that same year FSG Bank, where he had financed a shopping center purchase the year before, gave him 90 days to find a new home for the loan.
It wasn’t an easy road to funding at the credit union, either.
“I didn’t know anything about lending caps back then, but they said no because my loan would exceed their cap,” he said. “But, they did say they’d help me with an SBA loan, so I went with them.”
That shopping center was later redeveloped, and Moore said his company moved its executive offices with 30 employees to the property last month.
“When the credit union called, I didn’t know anything about this bill, but I’m glad they asked because I’m the poster child,” he said.
Clay Kearley, vice president of member business services at ORNLFCU, said his credit union is $30 million shy of its MBL cap. However, Kearley said his push for a legislation cap increase isn’t about fighting for today’s loans. It’s a fight for the future prosperity of the country.
Phil Dangel, owner of the Shrimp Dock in Knoxville, Tenn., also received an SBA loan through ORNLFCU. Dangel’s fresh fish market was denied loans by eight banks before he found the credit union and used the loan to add a third location and buy out his partner. Dangel said his fish market business, which also serve overstuffed shrimp sandwiches to customers during the day, “isn’t breaking any records, but business is good and we’re growing.”
Philip Maguire, owner of the Maguire Family of Dealerships in Ithaca, N.Y., said bankers were running away from auto dealers when the recession hit, particularly as auto makers asked for bailouts from the federal government. Thanks to credit from the $830 million CFCU Community CU of Ithaca, N.Y., and an indirect lending relationship with the credit union, Maguire said he has grown his dealerships from 30 employees in 2008 to more than 400 today.
“Not only have they provided me with personal and commercial loans, I’ve seen [CFCU] supply car loans all day long to people who were turned down by bankers,” he said. That availability of credit has enabled low-income residents of Ithaca to obtain reliable transportation needed to get and keep jobs, which has helped boost the local economy and tax base, he said.
Maguire said he’s impressed by how the credit union invests in the community, not only helping consumers but also supporting other local businesses that purchase vehicles from his dealerships.
William Crane, senior vice president at CFCU, said the 60,000-member institution is at more than 80% of its member business lending capacity.
“In about 12 to 18 months, we’ll have to start turning business away unless this bill passes,” he said.