MADISON, Wis. (5/29/13)--A bill in Congress to raise credit unions' member business lending (MBL) cap should be cheered not just because of its bipartisanship, but also because raising the cap "spreads freedom," according to one of two articles that discussed the MBL issue this past week.
"Those concerned with government eroding options for entrepreneurs should cheer this legislation, which lifts regulatory barriers to an untapped source of capital for start-ups--America's credit unions," wrote John Berlau, senior fellow at Competitive Enterprise Institute, a nonprofit public policy organization, in Daily Caller.com (May 24).
He was referring to Senate Bill 968, sponsored by U.S. Sens. Mark Udall (D-Colo.) and Rand Paul (R-Ky.), which would raise the MBL cap to 27.5% of assets from 12.25%.
Traditional sources of small business lending have dried up, and "credit unions have stepped in to fill the void," Berlau wrote. He referred to an interview on FoxBusiness.com with Rohit Arora, CEO of the Biz2Credit, who noted that government barriers to credit-union business lending would deprive thousands of entrepreneurial ventures of seed capital credit unions could provide.
"The bills don't go far enough; the cap should be eliminated entirely," wrote Berlau. For the full article, which also cited statistics from the Credit Union National Association, use the link.
In another article, Public Service CU CEO David Maus said his Denver-based credit union expects to hit the MBL cap within a year unless Congress raises it (Coloradoan.com May 27). Of bankers' opposition to raising the cap, Maus said that even if credit unions doubled that the 6% market share they have, "it wouldn't hurt [the banks] but it would add tremendous benefit to the economy. We help a lot of small business, and usually the people we help are people who have already been turned down by banks." Use the link for the full article.
CUNA has said that raising the MBL cap will generate $13 billion in funds for small business loans and help create 140,000 jobs. CUNA, the leagues, and credit unions are working to remove barriers through the political process.
Removing barriers is one of the three prongs of CUNA's Unite for Good campaign toward reaching CUNA's strategic vision for credit union movement, in which "Americans choose credit unions as their financial partners."