A year after the CreditUnion Small Business Jobs Creation Act was introduced toraise the member business lending cap from 12.25% to 27.5%, theurgency to boost that threshold is just as fresh as when thecurrent bill debuted last year on Valentine's Day.

Introduced by Rep. Edward Royce (R-Calif.), the act would givethe NCUA Board the authority to approve an application by aninsured credit union to make one or more member business loans thatwould result in a total amount of such loans outstanding at any onetime of up to 27.5% of the cooperative's total assets. That creditunion would have to meet certain specified safety and soundnesscriteria in order to bump up its MBL cap.

The NCUA Board would also develop a tiered approval process,including lending standards, under which an insured credit uniongradually increases the amount of member business lending in amanner consistent with safe and sound operations.

Expanding memberbusiness lending authority is so much of a priority forCUNA that the trade group considers it one of the motivators forenhancing the credit union charter, said Pat Keefe, CUNA vicepresident of communications.

“There are two things we're working towards enhancing the creditunion charter – increasing member business lending authority andthe second is the option for credit unions to have supplementalcapital,” Keefe explained. “There is legislation pending on both ofthose issues and we're continuing to advocate for those. So, wehaven't left (the MBL cap issue) behind by any means.”

In fact, enhancing the credit union charter will be one ofCUNA's top five issues discussed during this week's GovernmentalAffairs Conference in Washington, Keefe noted.

Likewise, raising the MBL cap to help America's small businessesremains a priority for NAFCU, said Brad Thaler, that trade group'svice president of legislative affairs.

“Providing relief for those credit unions at or near theartificial cap is a key part of NAFCU's five-point plan forregulatory relief,” Thaler said. “We continue to work with oursupporters on Capitol Hill to advance this issue, whether byseeking ways to advance legislation to raise the outdated cap, orto seek other smaller approaches to provide relief with certaintypes of loans.”

Furthermore, regulatory flexibility for MBLs is also part ofNAFCU's “Dirty Dozen” regulations, Thaler noted.

The credit union industry is still evolving with growing theirbusiness lending programs, said KentMoon, president/CEO of Member Business Lending LLC, a WestJordan, Utah-based CUSO. Only about 7% of the credit union industryis bumping up against their MBL caps, he said.

“This is not say to we should not press to increase the MBL cap.It means we should press harder to do so. With more potential forgrowth comes more opportunity,” Moon said.

Still, managing the cap is a much more pressing issue, heoffered.

“Loan participations and government guaranteed loans areexcellent cap management strategies,” Moon noted. “As credit unionsbecome more aggressively involved in business lending, capmanagement is a more pressing issue.”

In Michigan, credit unions filled the financing void left bybank troubles and consolidations in recent years,said BillBeardsley, president of Michigan Business Connection LC, an AnnArbor, Mich.-based commercial lending CUSO that serves more thantwo dozen credit unions and manages more than $250 million of loanassets. Given this success in growing loans, raising the cap is ascritical now as it has ever been, Beardsley emphasized.

“There is absolutely no doubt that some of the most successfulcredit unions in Michigan now need to constrain the amount ofcapital available to their members due to the cap, and many of thesmaller credit unions just don't get into business lending due tothe cap,” he said.

Opponents of raising the cap often look at this at the industrylevel, he explained.

“They argue, and in fact it is true, that there is plenty ofindustry capacity to fund business loans even with the currentcap,” Beardsley said. “But that's not how loans are made. Loans aremade by credit unions to their members in their communities, not byindustry capacity.”