MADISON, Wis. (12/5/12)--Two newspapers, one on the East Coast and one in the Midwest, have reported that credit unions are eager and able to provide small businesses with loans to grow their businesses.
St. Mary's Bank in Manchester, N.H., the first U.S. credit union, has been lending to businesses for more than a century, so if federal legislators allowed it to lend more money to businesses, that would be right in the heart of its mission, Ron Covey, St. Mary's president/CEO, told the New Hampshire Union Leader (Dec. 1).
The Credit Union National Association (CUNA) and credit unions are urging Congress to increase credit unions' member business lending (MBL) cap to 27.5% of assets from 12.25% so that more loans could be made to small businesses. CUNA and credit unions say that increasing credit unions' MBL cap would open up more opportunity to offer MBLs, inject $13 billion in business loans into the economy and create as many as 140,000 new jobs, with no cost to taxpayers. (See related News Now article "Startups creating more jobs than established firms.")
If that legislation passes, St. Mary's could double or triple its business loan portfolio of roughly $90 million, Covey told the Union Leader. With less than 5% of the business loans in New Hampshire, credit unions would not be taking way large amounts of business from banks if legislation passed, he added.
The lifting of the MBL cap is needed to bolster many small businesses in Wisconsin, Brett Thompson, president/CEO of the Wisconsin Credit Union League, told the Milwaukee Journal Sentinel (Dec. 1).
Many small businesses are increasingly looking to credit unions for their lending needs because they have seen their credit resources and lines of credit eliminated from their banking relationships, he added.
Small businesses would be helped and the economy turned around at no cost to taxpayers if the MBL cap were raised, Thompson told the Journal Sentinel. Most business loans that credit unions are issuing are too small for banks to be interested anyway, he added.
The average size of credit unions' business loans in Wisconsin is $176,000. Many members who come to credit unions have been turned down by banks because they do not want to handle such a small amount of credit, Thompson told the newspaper.
To read the articles, use the links.