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CUs functioned fine without a biz cap says Schenk
RALEIGH, N.C. (3/19/09)--Credit unions were operating very well before 1998 when Congress mandated a cap on business loans at 12.25% of a credit union’s total assets, said Mike Schenk, senior economist at the Credit Union National Association (CUNA). “For almost 100 years, credit unions have been making business loans,” Schenk told the Raleigh, N.C., News & Observer Wednesday. “For all but 10 of those years, there wasn’t a cap.” If the cap were removed, credit unions nationwide could loan an additional $10 billion to businesses, according to CUNA estimates, the newspaper said. Living under the cap is causing a lot of frustration for Coastal FCU, Pete VanGraafeiland, vice president of business lending, told the newspaper. Coastal turned down more than $30 million in loans during the past 90 days because it hit the limit. Coastal is a $2.087 billion asset, Raleigh, N.C.-based credit union. Small-business owners are “the people who are beating on our doors” because their lines of credit have been cut back or canceled by other financial institutions, VanGraafeiland told the paper. “It’s kind of heart-rending,” he added.
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