House Subcommittee Hearing on Small Business Lending Today

June 21, 2012 at 2:51 pm

The House Small Business Committee Subcommittee on Investigations, Oversight, and Regulations is holding a hearing today called “Small Business Lending: Perspectives from the Private Sector.” The hearing is about regulatory burdens associated with small business lending. Robert Marquette, President/CEO of Members 1st Federal Credit Union, will testify on behalf of the National Association of Federal Credit Unions (NAFCU)about the  impact of the member business loan cap for credit unions.

The cap on the amount of small business lending that credit unions can do was enacted in 1998 and limits the amount of small business lending to the lesser of 1.75 times the net worth of a credit union, or 12.25 percent of the credit union’s total assets. This would apply to loans above $50,000.

This cap severely restricts the amount of lending that credit unions can offer. As we have blogged about before (here and here), increasing this cap would allow for credit unions to reach more borrowers that are currently not being served by mainstream banks and financial institutions. NAFCU even points to a study by the Small Business Administration’s Office of Advocacy, stating that “bank lending was largely unaffected by changes in the credit unions’ business lending, and that credit unions have the ability to offset declines in bank business lending during a recession.”

As long as credit unions and other community-based lenders are restricted in their business lending, there will be small businesses and entrepreneurs that will be unable to access the capital they need. As a source of jobs and wealth, small businesses need to have access to the resources they need to support our local, state, and national economies.

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Entry filed under: Credit Unions, Small Business. Tags: , , .

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