MADISON, Wis. (9/20/12)--Although the overall volume of U.S. loan applications rose by 4.3% in August, credit union loan approvals declined--in part because of the member business lending (MBL) cap, according to the Biz2Credit Small Business Lending Index.
For a third consecutive month, credit unions' loan approvals slid in August, falling to 52.9%--the lowest percentage since June 2011 (innovationheat.com Sept. 18).
The slowdown in loan approvals is partially caused by the credit unions' mandated 12.25% MBL cap, the report indicated. Small banks were reporting increases in business lending, showing the need for business loans is strong, said Biz2Credit.
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, considered a staple in the economy. 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.
On Sept. 12, CUNA sponsored a Capitol Hill event in Washington, D.C., focusing on the timeliness of adopting credit union business lending legislation. It was live-streamed on the internet, bringing the urgency of the legislation into the offices of House and Senate members, as well as to credit unions and leagues nationwide (News Now Sept. 13).
The sponsors of the MBL legislation--Sen. Mark Udall (D-Colo.) and Rep. Ed Royce (R-Calif.)--made special appearances at the event, which drew nearly 200 credit union and small-business supporters, and members of congressional staff.
Udall said that the restriction on credit union business lending is a "regulation that we ought to lift."
"When credit unions have this additional capacity to lend to small businesses, it's a no-cost, sure-fire way to grow our economy," Udall said. "Simply put: There are credit unions with money to lend, and small businesses in many communities that need loans to spur job growth--why don't we get government out of the way and let our economy grow?"
The event also included panels of small business advocates, credit unions and small-business owners. Panelists said they saw no clear reason to oppose an MBL cap increase, and while banks have claimed there is no demand for small business loans, John Arensmeyer, CEO of The Small Business Majority, said his experience indicates universal demand for small-business loans nationwide.
To read the innovationheat.com and News Now article, use the links.