The Texas Association of Business said credit unions have a strong track record when it comes to lending to small businesses.

Bill Hammond, president/CEO of TAB, said he frequently hears from business owners who are struggling to get loans. In an April 23 editorial in the Houston Chronicle, he pointed out that small business lending by banks have plummeted over the past four years and a government program designed to provide loans has been underutilized.

“But there has been one bright spot in the tough lending picture, and that is credit unions,” Hammond wrote. “Credit union lending to small businesses rose 44% over the last four years after small business entrepreneurs gave up on banks and were forced to look elsewhere for loans.”

Hammond said the average credit union loan is almost $220,000, making credit unions the perfect partner for small businesses.

The business group is throwing its support behind S. 2231, which would raise the member business lending cap from 12.25% to 27.5% of a credit union's assets.

“The idea for raising the cap is supported by the U.S. Treasury and, unlike government programs that rely only on spending to stimulate lending, credit-union lending is a proven model that does not require a dime from the taxpayers,” Hammond wrote.

To the banking industry's argument that credit unions have a tax structure advantage over banks, Hammond disagreed, saying credit unions have been not for profit for more than 100 years but only have less than 5% of the business lending market.

“Given that access to capital is still difficult for small businesses, it is critical that we untie the hands of those lenders who actually welcome small loans,” Hammond wrote.

Founded in 1922, TAB said it represents more than 3,000 small and large Texas employers and 200 local chambers of commerce.