WASHINGTON-Credit unions are catching the eyes of lawmakers and possibly the Small Business Administration (SBA) regarding the role they can play in providing services to small businesses in need following September 11. SBA Administrator Hector Barreto was recently questioned during a hearing of the House Small Business Committee, “90 Days After September 11: How are small businesses being helped?” about the role federally-insured credit unions could play in providing government-backed loans to small businesses. Credit union friend Congresswoman Stephanie Tubbs Jones (D-Ohio), during the hearing, noted a bipartisan letter recently written to Barreto, urging the SBA to permit federally-insured credit unions to participate in its general loan programs. According to NAFCU Associate Director of Legislative Affairs Brad Thaler, Barreto said he was willing to work with the credit union community. Legislation is currently pending in Congress, the American Small Business Emergency Relief and Recovery Act (H.R. 3230), that would clarify that all federally-insured credit unions are eligible to participate in the SBA’s emergency guarantee loan program. Congress is expected to recess before the bill, which was approved by the House Small Business Committee, receives much attention. NAFCU Senior Vice President and General Counsel Bill Donovan pointed out that there is no disagreement on the statutory authority of federally-insured credit unions granting SBA-backed loans, but NAFCU is trying to get the SBA to “utilize the authority that Congress has already conferred upon the agency.” He paraphrased Barreto as saying during the hearing that credit unions may sometimes be the only opportunity available to a small business. CUNA Senior Vice President of Governmental Affairs John McKechnie emphasized that while CUNA is certainly interested in the issue, the trade association sees a “much clearer path to getting this done through the regulatory route.” He said that legislation like Congressman Ed Royce’s faith-based lending bill is more clear-cut and what CUNA wants from lawmakers. In pursuing the regulatory front, CUNA has had preliminary meetings and plans more formal ones with SBA in January on the issue, according the CUNA Associate General Counsel Mary Dunn. She said that not only is eligibility at issue, but “there needs to be a better understanding of what’s available from SBA.” Dunn added that while the issue is not one she hears often from CUNA members, “Those that are interested are very, very interested.” Nine Democrats and three Republicans, including Tubbs Jones and Peter King (R-NY), wrote in a December 6 letter, “We are writing to suggest an immediate step you can take that would prove beneficial to our nation’s small businesses in particular. Specifically, we recommend that you exercise your regulatory discretion and extend to our nation’s federally-insured credit unions the same authority to offer SBA guaranteed loans enjoyed by other federally-insured lenders.” Currently, the SBA’s policy is only to approve community-chartered credit unions the ability to participate in their loan programs. SBA has expressed concern that in credit unions serving only a specified field of membership, there is a greater potential for discrimination in lending. This has kept credit unions from offering SBA loans to the low hundreds. This practice is ironic given that the SBA’s own general counsel’s office wrote an opinion 25 years ago that federal credit unions should not be excluded from participating in SBA loan program because they are complying with NCUA membership requirements. [email protected]

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