Citing polling data that showed more than 60% of small business owners reported lack of available credit as a serious problem, CUNA President/CEO Bill Cheney wrote lawmakers that raising the cap on member business loans would “help small businesses and the economy recover.''
NAFCU President/CEO Fred Becker wrote that the current cap of 12.25% “continues to hinder the ability of local lenders to help lift small businesses out of the worst financial crisis since the Great Depression.''
The trade associations' leaders addressed their letters to the chairman and ranking Democrat on the House Small Business Committee. The panel, which held a hearing Wednesday on small business job creation, doesn't have jurisdiction over the legislation. However, Becker and Cheney urged lawmakers to cosponsor the measure, which would raise the cap on MBLs to as much as 27.5% of assets.
Cheney cited a survey by a coalition of small business groups that showed that 64% of respondent believe that the lack of available credit is a “serious or fairly serious problem.'' In addition, 61% of respondents said it is harder to get a small business loan than it was four years ago. Becker wrote that the bill is “a carefully crafted compromise tailored to address the concerns that raising the current cap could somehow create safety and soundness issues.'' The legislation, sponsored by Rep. Ed Royce (R-Calif.), would require that credit unions must be well-capitalized, be at or above 80% of the current cap, have five or more years of member business lending experience and be able to demonstrate sound underwriting and servicing.
If a credit union's net worth ratio falls below the well-capitalized requirement (currently 7%), it would have to stop making new business loans. It has 114 cosponsors in the House. A companion bill by Sen. Mark Udall (D-Colo.) has 22 cosponsors. There have been hearings on the measure in both the House Financial Services Committee and the Senate Banking Committee. At both sessions, NCUA Chairman Debbie Matz endorsed the measure. There also has been some talk that the bill could be combined with a bill that would provide regulatory and tax relief to banks and regulatory relief to credit unions.
© Touchpoint Markets, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more inforrmation visit Asset & Logo Licensing.