WASHINGTON (4/26/13)--The Credit Union National Association supports a U.S. Small Business Administration (SBA) proposal that would ease the loan application process for small business owners, as well as increase access to certain SBA financing for certain business owners. In a comment letter to the SBA, CUNA also noted that congressional action to increase the member business lending cap would also help small businesses.
The SBA proposal would "strip away regulatory restrictions that detract from the 504 Loan Program's core job creation mission as well as the 7(a) Loan Program's positive job creation impact on the American economy," the CUNA letter noted. The proposal would achieve this end, in part, by:
Eliminating a personal resources test from the regulations for both loan programs; and
Allowing SBA applicants more flexibility to use their loans to finance expenses.
"CUNA strongly supports efforts of federal agencies to eliminate unnecessary, outdated regulatory restrictions on credit unions," CUNA Senior Assistant General Counsel for Regulatory Advocacy Luke Martone wrote.
There were 347 credit unions with over 8,100 SBA loans outstanding, totaling $921 million in funds, at the end of 2012, he noted. The SBA-guaranteed portion of a 7(a) Loan is not counted against a credit union's business lending cap, but there are approximately 500 credit unions that are currently constrained by or actively managing their MBL cap.
CUNA in the comment letter urged the SBA to give facilitate credit union loans to small businesses by supporting legislation that would increase the 12.25%-of-assets MBL cap. The cap "restricts some credit unions from fulfilling the small business financing needs of their members," Martone wrote.
Increasing the MBL cap to 27.5%-of-assets, as proposed in the Credit Union Small Business Jobs Creation Act (H.R. 688), would permit credit unions to lend an additional $13 billion to small businesses, helping them create over 146,000 new jobs in the first year after enactment.
"This can be done at no cost to taxpayers and without increasing the size of government. Credit unions do not need taxpayer assistance to encourage them to do more business lending; credit unions only need authority from Congress," the CUNA letter noted.
For the full comment letter, use the resource link.