WASHINGTON (6/22/12) —While the total number of credit unions' U.S. Small Business Administration (SBA)-supported loans have grown by 89% since December 2007, credit unions could do even more to help small businesses if the U.S. Congress would raise the cap on member business loans (MBL) and provide regulatory relief, Redwood CU President/CEO Brett Martinez told a House subcommittee yesterday.
Redwood CU President/CEO and CUNA Board Member Brett Martinez told subcommittee members that SBA guaranteed loans and credit union MBLs can both help small business owning credit union members. (CUNA photo)
tinez, who testified on behalf of the Credit Union National Association (CUNA) before the House Small Business investigations, oversight and regulations subcommittee, said regulatory roadblocks and the 12.25% of assets MBL cap are hurting the ability of credit unions to do more to improve the "fragile economic recovery.'' Martinez is a CUNA board member.
He said his credit union and others are "severely constrained'' by the cap and urged House lawmakers to pass legislation by Reps. Ed Royce (R-Calif.) and Carolyn McCarthy (D-N.Y.) to raise the cap to 27.5% of assets for qualified credit unions.
Martinez, whose 220,000-member, $2 billion-asset Santa Rosa, Calif.-based credit union is the largest SBA credit union lender in the country by loan volume, said his financial institution is at 75% of the cap. If the cap isn't increased, his credit union could only make member business loans for another 18 months, he added. His credit union has about $190 million in outstanding member business loans and $68 million in SBA loans, and has had to sell some of its business loans on the secondary market to stay within the MBL cap, he noted.
He also reiterated CUNA's estimate that MBL cap increase legislation would generate $13 billion in new capital and create 140,000 jobs in the first year following enactment. Those benefits, he pointed out, would come at no cost to the American taxpayer.
In response to a question from the subcommittee chairman, Rep. Mike Coffman (R-Colo.), Martinez said that relatively few credit unions make business loans because the low MBL cap discourages additional credit unions from getting into business lending. Martinez told subcommittee member Janice Hahn (D-Calif.) that credit unions could make more loans if the SBA made the application process easier and provided additional training to credit unions.
He urged lawmakers to extend the SBA 504 refinance loan program and the SBA 504 First Mortgage Lien Pool (FMLP) programs, both of which are scheduled to expire this September.
In response to another question from Coffman, Martinez said when discussing loan options with members his credit union doesn't steer them towards an SBA or member business loan because one or the other is easier for his financial institution. Rather, their primary consideration is which loan is most appropriate for the member.
Others who testified at the hearing were: Tim Dixon, senior vice president, head of Small Business Administration Lending, Citizens Bank, Warrensville Heights., Ohio; Robert Marquette, president/CEO, Members 1st FCU, Mechanicsburg, Penn.; and David Rader, business executive, SBA Lending, Wells Fargo, Minneapolis, Minn.