MADISON, Wis. (4/23/12)--U.S. Rep. Ed Royce (R-Calif.) and several media outlets highlighted credit unions' push to pass a member business lending (MBL) bill--the Small Business Lending Enhancement Act--before the U.S. Senate this month.
"My bill provides small businesses access to credit they desperately seek by safely raising the member business lending cap set on credit unions," Royce, a sponsor of the bill, said in a featured column in flashreport.com, operated by GOP party official Jon Fleischman and read by politically versed people. "Many of our country's local businesses turn to financial institutions, which are often times credit unions. Nothing beats the peace of mind coming from the familiarity through proximity.
"A 'ma and pa' flower shop looking to expand into e-commerce--creating possible employment for delivery drivers and packers--would turn to their neighborhood institution first before anywhere else," he continued. "Why not give these credit unions, so heavily relied on by local small businesses, the ability to safely supply the demand for credit?"
The Credit Union National Association (CUNA) and credit unions are urging Congress to increase credit unions' MBL cap to 27.5% of assets from 12.25%. Doing so would open up more opportunity to offer MBLs, inject $13 billion in loans into the economy and create as many as 140,000 new jobs, with no cost to taxpayers, CUNA said.
The Baltimore Business Journal noted Friday that the bill "has become a flash point of contention between credit unions and banks."
The Journal added: "Many credit union CEOs say the legislation would boost jobs by providing another source of credit to small businesses that want to expand and hire more workers. Bankers, on the other hand, counter that credit unions are infringing on their turf and taking advantage of laws that give them an unfair advantage by exempting them from paying corporate income tax."
Raising the credit union MBL cap is good for consumers because it would boost lending by $201 million in Maryland in the first year alone, creating nearly 2,200 jobs, John Bratsakis, CEO of the Maryland and District of Columbia Credit Union Association, told the Journal.
SECU, based in Linthicum, Md., wants to issue more business loans, and there is sufficient member demand to support a raising of the cap, Rod Staatz, CEO of SECU, told the Journal.
Also, Rogue FCU (RFCU), a $542 million asset credit union, based in Medford, Ore., hopes to double its small-business lending by this time next year if the MBL bill becomes law (Mail Tribune April 20).
With no taxpayer dollars involved and capital sitting idle, it makes sense to deploy it, Gene Pellham, RFCU president/CEO, told the newspaper.
Heritage Community CU, a $198 million asset credit union based in Sacramento, Calif., has launched a business lending program, which will offer members business credit cards, commercial real estate loans, and loans for commercial vehicles and equipment (Sacramento Business Journal April 20).
The credit union is joining a growing credit union movement to expand beyond consumer markets, the Journal noted.