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Iowa MBL saves 40 jobs at grain elevator
OTTUMWA, Iowa (8/30/10)--An Iowa credit union is receiving both media and congressional attention for saving 40 jobs at Troy Elevator, a grain elevator that was destined to close when its relationship with a bank fizzled. Pending legislation in Congress would allow credit unions to help more such businesses at no expense to taxpayers, said the Credit Union National Association (CUNA) and the Iowa Credit Union League. Troy Elevator, with locations in Troy, Bloomfield, Pulaski and Blakesburg, Iowa, will continue operations and keep 40 Iowans employed, thanks to Community lst CU, said the league. For the past 18 months, Community 1st CU worked with the grain elevator to keep it from closing. Recently it provided a guaranteed loan through the U.S. Department of Agriculture's (U.S.D.A.) Rural Development Program. Troy Elevator, in business since 1928, suffered severe damage at its Pulaski site during a tornado in 2008. Its president, Robert Newton, began working with his lender at that time to restructure the company's long- and short-term debt to recover from the tornado's damages. In January 2009, the lender informed Newton it would no longer do business with Troy Elevator. "We had never missed a payment or been late in our 18-month relationship with the bank," said Newton. "We were completely shocked and frustrated that they wouldn't help us." In December 2009, Community 1st began working with the company. "We knew Troy Elevator was having issues with its lender, and we didn't want to see them close their doors," said Terry Maloy, president/CEO of 1st Community. The grain elevator applied for the U.S.D.A. loan through the credit union and received approval earlier this month. It reorganized and kept all 40 jobs in Iowa. "We are so thankful to Community lst CU for stepping up to help us during our desperate time of need, especially when banks turned us away," Newton said. "We were able to save our business and the jobs of our employees thanks to this credit union." The league noted that although Community 1st was able to help the grain elevator, it may not be able to make a loan to the next struggling business owner because federal law restricts a credit union from lending more than 12.25% of its assets. Community 1st is at the maximum cap of its assets, which means it would be forced to turn away the next business owner in need of access to capital, even though the business would qualify for the loan. "Iowa credit unions have always practice safe lending practices, and now more than ever, Iowans are turning to credit unions with their business lending needs," said league President/CEO Patrick S. Jury. "Iowa credit unions are in a position to do even more if given the opportunity, allowing for greater capital expenditures, greater economic activity and--ultimately--more job creation," he added. CUNA urged credit unions to continue to seek federal legislators’ support for increased member business lending (MBL) authority while lawmakers are in their home districts during the current District Work Session, which ends Sept. 13. “Credit union representatives are right now talking to their senators about how an increase in the MBL cap would positively affect the economy by infusing as much as $10 billion of new credit into small businesses, and as many as 108,000 new jobs into the job market, at no cost to the taxpayer,” said John Magill Friday. Magill is CUNA senior vice president of legislative affairs. “This story shows that CUNA figures reflect the real needs of real small business owners. It is proof positive that now more than ever MBL relief is warranted--vital to small businesses--and should be passed by Congress without hesitation,” Magill added. When the Senate is back in session, it is expected that chamber will return to its work on a small business jobs bill, which is a possible vehicle for an amendment that would increase the MBL cap to 27.5% of assets, up from 12.25%.
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