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Member Business Lending


Credit unions have been making member-business loans (MBLs) since their inception in the early 1900s. In the first 90 years of their existence, there was no cap on business lending. The current cap was imposed by Congress in the Credit Union Membership Access Act of 1998. This arbitrary cap limits most credit unions to lending no more than 12.25% of their assets to small businesses without any economic, safety and soundness, or historical rationale.  

Where We Stand

As part of a long-term strategy utilizing 360 degree advocacy and pushing for large and incremental changes, CUNA has shepherded significant MBL expansion and relief through NCUA and Congress since 2016.  ​

S.2155 was signed by the President on May 24, 2018. It provides significant regulatory relief in general for credit unions but also reclassify one-to-four unit, non-owner occupied residential loans as real estate loans, so the loan would not count against the member business lending cap​

NCUA finalized a significantly enhanced MBL rule in February 2016. The final rule:​

  • Changed the MBL regulation from the current prescriptive approach to a more principle-based methodology. While this change provides more flexibility and autonomy to credit unions, it emphasizes and requires sound risk management practices for commercial lending.
  • NCUA retains rigorous and prudential supervision of all credit union commercial lending activities.
  • The MBL cap is presented as a multiple (1.75 times) of net worth which is more closely aligned with the language in the FCU Act. (Note: This proposed change would not increase the cap.) 
  • There is a new definition intended to help differentiate commercial loans subject to the MBL cap from commercial loans that invoke the safety and soundness provisions but are not otherwise subject to the cap.
  • Increased oversight by credit union boards is required to ensure policies and procedures are consistent with the rules and principles of safety and soundness. 
  • Examination of loans and policies will be more thorough. 
  • The personal guarantee requirement was eliminated in is effective now. The rest of the rule has a January 1, 2017, implementation date. 

The ICBA filed a lawsuit against NCUA claiming the agency exceeded its authority and violated provisions of the credit union act by excluding loan participations from the MBL calculation. CUNA filed an amicus brief supporting the Motion to Dismiss filed by the NCUA which was granted by the court dismissing the ICBA suit. ICBA will not appeal this ruling.​



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Luke Martone

Senior Director, Advocacy & Counsel

Email Luke


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