CUNA and NAFCU are using today’s hearing by the House Financial Service on small business lending to reiterate their push to raise the cap on member business loans from 12.25% of assets to 25%, even though the legislation being considered doesn’t currently include such a proposal.

“If Congress intends to give community banks $30 million in taxpayer money as an incentive to lend, why would Congress not also increase the credit union business lending cap and permit credit unions to use existing resources to lend to their business-owning members? This is a question small businesses, credit union employees and volunteers ask me every day,” CUNA President/CEO Dan Mica said in his written testimony that the committee released.

Mica is scheduled to tell lawmakers that CUNA doesn’t oppose the proposal, first unveiled by President Obama in January, which would have the government redirect money from loans paid back under the TARP program to a fund that community banks with assets of less than $10 billion could borrow from.

Mica is to tell lawmakers that the raising the MBL cap wouldn’t impact on credit unions’ ability to do consumer lending because most credit unions would fund the additional business loans from their excess investment holdings. He noted that Treasury Department officials have said they could support raising the cap for some credit unions if they are well capitalized, have done member business lending for at least five years and show that they have done sound underwriting and serving.

In his testimony, he also endorses legislation that would authorize federal support for state-run business-lending programs.

In a letter to committee members, NAFCU Executive Vice President B. Dan Berger said that “eliminating or raising the arbitrary credit union member business lending cap would help take an important step in the recovery of the small business community and the overall economy.”

To read all the prepared testimony for the hearing, go to: http://www.house.gov/apps/list/hearing/financialsvcs_dem/hrng_05182010.shtml