WASHINGTON (3/6/09)--Sen. Charles Schumer’s (D-N.Y.) intent to draft a bill that would lift the credit unions’ member business lending caps (MBL) is good news not only for credit unions, but for small businesses, which credit unions are ready to help, according to the Credit Union National Association (CUNA). Schumer, a member of the Senate Finance and Senate Banking Committees, announced Thursday that he is drafting legislation to lift the caps--which currently prevent credit unions from engaging in lending that is more than 12.25% of their total assets. Schumer cited CUNA's estimate that credit unions could lend $10 billion to small businesses in the first year after the cap is lifted. Lifting the cap would help small businesses facing a gaping void in credit availability, Schumer said in a letter to colleagues. “Credit unions also have a long track record of scrutinizing borrowers, and low delinquencies as a result,” Schumer said in a release. “Because deposits have been on the rise as people move their savings from the stock market to savings accounts, they have cash on hand to loan to small businesses." “Credit unions have stood ready to help small businesses, but many are chafing against the arbitrary statutory cap that exists under current law,” said John Magill, CUNA senior vice president of legislative affairs. Magill noted that Schumer has said the bill’s focus “must be on increasing lending to small businesses--the ‘lifeblood of our economy.’” Magill added: “His legislation would do just that, and with no cost to the American taxpayer.” The cap on member business lending has been in place for 10 years and credit unions have a long and safe record of making such loans, Magill said. More than one-quarter of the nation’s 8,147 credit unions offer member business lending, CUNA figures indicate, and those loans grew by 18% last year to $33 billion from $28 billion in 2007. The average loan size is $215,000. "Many credit unions have made it clear they would lend even more money if they could," Magill said. The National Credit Union Administration also has commended Schumer for his plans to draft legislation on MBL caps. “NCUA considers credit union member business lending to be a tangible and important benefit for small businesses, provided that the loans are properly regulated and made in a prudent manner consistent with safety and soundness standards,” said NCUA Chairman Michael Fryzel. “I commend Sen. Schumer for his recognition of the important role credit unions can play in helping members during these difficult economic times.” Member business lending caps were one of credit unions’ many talking points during an annual Hike the Hill event that coincided with the Governmental Affairs Conference in Washington, D.C. last week. During the Hill hikes, representatives from credit unions nationwide expressed to congressional members that they want the caps lifted to help small businesses thrive in a tough economy (News Now Feb. 26).