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MBL cap lift long overdue says Calif. CUs
ONTARIO, Calif. (8/3/10)--Lifting credit unions’ member business lending cap is long overdue, California credit unions told The Los Angeles Business Journal Monday. U.S. Sen. Mark Udall (D-Colo.) has proposed an amendment to a jobs bill that would raise credit unions’ cap to 27.5% from 12.25%. The Senate is expected to vote as early as this week on the measure, the publication said. The Credit Union National Association (CUNA) and credit unions support the amendment. Grace Mayo, CEO of Telesis Community CU, Chatsworth, Calif., said that the bill is “long overdue” because there are many credit unions that can and should be able to make business lending “a regular program.” An increase in lending could generate $694 million in small business loans in Los Angeles County over the next year, according to California Credit Union League data the publication cited. The league also estimated that the higher caps could create 7,500 jobs in the area. Of the 140 credit unions in Los Angeles County, about 53 engage in small business lending. The credit unions have about $3.2 billion in outstanding commercial loans. During the first quarter of this year, business lending was up 9.5% year-over-year at credit unions nationwide, while bank lending has declined, the Journal added. Some California credit unions, including Kinecta FCU, Manhattan Beach, plan to increase their business lending if the caps are raised. Paul Cleary, Kinecta vice president of lending, said he regularly receives calls from businesses looking for capital. Kinecta began offering such loans in 2006 but pulled back because of the economy. Kinecta wants to offer the loans again, and a higher cap would allow the credit union to dedicate more resources to lending, he added. CUNA has estimated that nationally, lifting the caps could free up $10 billion in credit and create more than 108,000 jobs.
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