MBL cap increase would boost small biz cash access, CUNA says

Credit unions share the U.S. House Small Business Committee's goal of increasing small business access to capital through the reduction of statutory and regulatory impediments. The Credit Union National Association (CUNA) suggested several ways that access could be improved, including increasing the member business lending (MBL) cap, in a letter sent to committee members last week.

The letter was sent for the record of a Small Business subcommittee on economic growth, tax, and capital access hearing entitled "Where Are We Now? Examining the Post-Recession Small Business Lending Environment."

In the letter, CUNA noted that "businesses want and need access to capital, but are experiencing difficulty and frustration when they approach their financial institution and discover that capital is not easily accessible, even if the business is successful."

Credit unions, CUNA said, "are well capitalized and exist to serve the financial needs of their members...Allowing the free market to function, by removing the restrictions on the business lending portfolios of credit unions, will inject more capital in the market place and encourage growth in businesses and the communities in which they operate."

The letter spoke in support of the Credit Union Small Business Jobs Creation Act (H.R. 688), which would increase the MBL cap from 12.25% of assets to 27.5%. CUNA has estimated that lifting the MBL cap would create 140,000 jobs and inject $13 billion in new funds into the economy, at no cost to taxpayers.

"The bank lobby opposes this bill because they oppose credit unions; their arguments are without merit. The bill will not endanger the small banks in your community; the bill will not alter the nature or focus of credit unions; the bill is not inconsistent with the credit union mission or the purpose of their tax status," CUNA wrote.

Other suggestions for improving capital access include:

  • Treating non-owner occupied one-to four-family dwelling loans as real estate loans;
  • Increasing the de minimis credit union business loan amount to $500,000;
  • Encouraging small business development in underserved, urban and rural communities;
  • Excluding MBLs made to non-profit religious organizations from the MBL cap;
  • Fully exempting government-guaranteed business loans from the MBL cap;
  • Enabling full credit union participation in the U.S. Small Business Administration's Section 504 program; and
  • Reducing the loan-loss reserve requirement of the SBA's microloan program.