NEENAH, Wis. (10/25/11)--Lakeview CU was spotlighted for its member business lending (MBL) efforts in an Oshkosh Northwestern newspaper article, but the story also noted how the MBL cap hinders the Neenah, Wis.-based credit union's efforts to help more small business members.
"Every time Lakeview Credit Union CEO Pat Lowney authorizes a business loan, he makes money for someone else," the article opens.
It goes on to explain, "For several years, Lakeview has been limited by a federal law that caps credit union business lending to 12.25% of its total assets. So when a Lakeview member requests a business loan, Lowney said he has to find another credit union willing to purchase the majority of the loan from the Neenah-based credit union."
Selling the loan slows the lending process down dramatically, Lowney told the paper.
The article describes the nationwide efforts of credit unions to champion federal legislation that would increase the to 27.5% of total assets to bolster small business lending and job creation.
Raising the cap up to 27.5% would open up $405 million in new lending capability for Wisconsin credit unions, Brett Thompson, Wisconsin Credit Union League CEO told the Northwestern.
Thompson said the decline in commercial lending by banks since the recession has left a gap credit unions can fill.
"There are members of credit unions coming in and asking them to make loans because they're not finding other alternatives available to them in the banking community," Thompson told the paper. "There is a need out there and it's not being met."
The Credit Union National Association (CUNA) and credit unions are urging the U.S. Congress to increase credit unions' MBL cap because doing so would open up more opportunity to offer MBLs, inject $13 billion in loans into the economy and create about 140,000 new jobs, with no cost to taxpayers.