X

Thank you for sharing!

Your article was successfully shared with the contacts you provided.

WASHINGTON – The Small Business Administration’s decision to cut back the maximum size of guaranteed loans in its 7(a) program may prove to be good news for credit unions, although banks aren’t happy with the agency’s move. Starting Oct. 1, the maximum size of a loan backed by the SBA’s 7(a) program will be $500,000. It was previously $2 million. The new limit will be applied to the combined loans of each borrower. CUNA General Counsel Eric Richard said the new loan limit “is a function of the Bush administration’s request for cuts in certain appropriations programs,” and that included cuts of about 50% from the guaranteed loan program. Since the SBA’s mission has always been to spread credit around as wide as possible, the 50% cuts in the guaranteed loan program mean the amount they’re appropriated has to be divided in to smaller pockets, said Richard. He stressed that, “Credit unions haven’t been out their lobbying for the cuts in the loan program. We’re not trying to keep people out of the loan program, we’re trying to get them in.” Since credit unions currently participating in the SBA program typically make loans of under $100,000, compared to banks that tend to make larger loans, “it’s possible that the cuts in the SBA’s guaranteed loans will negatively affect banks more than credit unions,” Richard said. He acknowledged though that the handful of credit unions that make large loans will likely be more affected by the cuts than other CUs that make small SBA loans, but “the vast majority of credit unions will be minimally impacted by the SBA’s decision,” said Richard. Meanwhile, CUNA and the other trade association are continuing to talk with the SBA to convince the agency to open up the loan program for more credit unions to participate in. Richard said a meeting was scheduled for Sept. 23 between representatives from CUNA, NAFCU, corporate and natural person credit unions with the SBA “to participate in focus group discussions on how credit union participation in the loan program will work.” “We’re getting down to the nitty gritty,” said Richard. -

Credit Union Times

Join Credit Union Times

Don’t miss crucial strategic and tactical information necessary to run your institution and better serve your members. Join Credit Union Times now!

  • Free unlimited access to Credit Union Times' trusted and independent team of experts for extensive industry news, conference coverage, people features, statistical analysis, and regulation and technology updates.
  • Exclusive discounts on ALM and Credit Union Times events.
  • Access to other award-winning ALM websites including TreasuryandRisk.com and Law.com.

Already have an account? Sign In Now
Join Credit Union Times

Copyright © 2019 ALM Media Properties, LLC. All Rights Reserved.