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WASHINGTON – CUNA is seeking input from credit unions on NCUA’s proposed member business loan rule that would enable them to participate more fully in the U.S. Small Business Administration loan programs. CUNA has posed three key questions on the proposal as it prepares its letter for NCUA: are there any other modifications that should be made to the MBL rule so that it is better aligned with the lending programs offered by the SBA?; are there any other modifications (such as changing the loan-to-value definition) to the MBL rule that you think are particularly important to advocate NCUA to make?; are there other government programs of which NCUA should be aware with regard to the MBL rule? Under the proposed rule, FCUs would be able to make SBA guaranteed loans under SBA’s “less restrictive” lending requirements, rather than under NCUA’s “more restrictive” MBL lending requirements, CUNA said. NCUA recently wrote loan maturity limits, usury ceiling and prepayment penalties are terms of SBA’s lending programs for which FCUs may rely on SBA’s rules, instead of on its MBL requirements. Under the proposal, the MBL rule’s collateral and security requirements would not apply to MBLs made as part of a SBA guaranteed loan program. The MBL rule’s provisions on construction and development lending includes the requirements that the borrower must have a minimum of 25% equity interest in the project being financed and that the net member MBL balances for all construction and development loans must not exceed 15% of net worth; generally, the maximum loan-to-value ratio for all liens must not exceed 80%. This exemption would allow federally insured credit unions to make construction and development loans under the safety and soundness standards established by SBA. The SBA’s general collateral policy requires guaranteed loans to be fully secured; with SBAExpress lenders are not required to take collateral for loans up to $25,000 and may use their existing collateral policy for loans over $25,000 up to $150,000. Comments are due to CUNA by Aug. 13 and to NCUA by Aug. 30. [email protected]

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