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MBL growth rate slows but still fastest CU loan growth

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WASHINGTON (2/15/10)--The growth rate of member business loans (MBLs)--like all other types of loans--is dropping, but MBLs remain the fastest type of loan growth for credit unions, according to Credit Union National Association (CUNA) Chief Economist Bill Hampel. Looking at just the last four years, MBLs have shown strong growth each year. In the year ending September 2009, the latest figure available from CUNA, MBL growth rate was at 11%. In 2008 the growth rate was 18.1% ; in 2007 it was 17%; in 2006 it was 24.3%; and in 2005 it was a walloping 32.8%, all according to CUNA's Credit Union Profile. "Loan growth in all categories declined in credit unions last year in response to the recession. MBL growth also declined, but it remained the fastest growing component of credit union lending," Hampel told News Now. "And, the continued growth of MBLs at credit unions is in sharp contrast to the decline in business loans at other lenders," he said. "For instance, in the 12 months ending last September, MBLs at credit unions rose by 11% compared to a 15% decline at other depository institutions," Hampel said. "However, the strong pace of credit union business lending cannot be maintained for much longer without an increase in the MBL cap as more and more credit unions are bunching up under the cap," he said. Credit unions currently are required by federal law to limit MBLs to 12.25% of assets. CUNA is supporting a measure before Congress that would raise the MBL lending cap for credit unions to 25% of assets and would increase the minimum business loan subject to the cap to $250,000 from $50,000. The Small Business Lending Enhancement Act would spur small-business growth and create jobs by increasing access to loans from credit unions, says CUNA.