Credit unions mean business

Credit unions mean business

Credit unions mean business — and the numbers prove it.  According to the National Credit Union Administration and the Federal Deposit Insurance Corp., federally insured credit unions (FICU) have outpaced banks in small-business loan growth over the past several years. Here’s what the numbers say:

2011: Small-business lending up 5.1 percent at FICUs, down 4.3 percent at banks.

2012: Up 6.5 percent at FICUs, down 1.5 percent at banks.

2013: Up 10.1 percent at FICUs, down 0.5 percent at banks.

2014: Up 12.4 percent at FICUs, up a modest 1.9 percent at banks.

Unfortunately, credit unions have been hampered from doing more business lending by an arbitrary lending cap that limits their business loans to 12.25 percent of assets.

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Lawmakers and regulators have long recognized credit unions’ value to Main Street businesses, which help create jobs and boost our economy. In the past few weeks, credit unions have seen several new bills introduced in Congress that would help advance their ability to provide access to much-needed capital to small-business members:

• Reps. Ed Royce (R-Calif.) and Gregory Meeks (D-N.Y.), both on the House Financial Services Committee, recently reintroduced H.R. 1188, the Credit Union Small Business Jobs Creation Act of 2015, legislation to raise the credit union member business loan cap from 12.25 percent to 27.5 percent of assets for eligible institutions.

• Rep. Jeff Miller (R-Fla.), chairman of the House Veterans’ Affairs Committee, recently reintroduced a bill, H.R. 1133, which would exclude business loans made to veterans from the statutory credit union member business lending (MBL) cap.

While this legislation is pending, credit unions are not resting on their laurels. Maria Contreras-Sweet, the administrator for the Small Business Administration (SBA), and I recently signed a Memorandum of Understanding (MOU) to invest in America’s future entrepreneurs and economy. This partnership affords credit unions much-needed flexibility and more access to SBA to help serve their small- business members. Credit unions have always wanted to do more to help their small-business members, and this initiative will go a long way toward making that possible.

Member business lending is one of the key tenets of NAFCU’s five-point plan for regulatory relief and NAFCU’s new “Top Ten” list of regulatory requirements that should be eliminated or amended to ensure regulatory relief. Credit unions did not contribute to the financial crisis yet are still subject to increasing regulatory requirements mandated under the Dodd-Frank Act. Broad-based regulatory relief continues to be a top priority for NAFCU.

Credit unions proved to be a particularly valuable resource for small businesses during the financial crisis. A 2011 study commissioned by the SBA’s Office of Advocacy found that bank business lending was largely unaffected by changes in credit unions’ business lending, and credit unions’ business lending can actually help offset declines in bank business lending during a recession. The study indicates that, during the 2007-2010 financial crisis, while banks’ small-business lending decreased, credit union business lending increased in terms of the percentage of their assets both before and during the crisis, which is highlighted by the chart above.

The time is right for Congress to act now to allow credit unions to build on their successes and allow them to fulfill their mandate to serve their small-business members to the best of their ability. 

Berger is president and CEO of the National Association of Federal Credit Unions.