Small businesses are uniquely positioned to help fuel the nation’s economic recovery, but in order to grow and create new jobs they need access to capital. Many banks still aren’t lending to smaller enterprises, however, and many credit unions, which stand ready and willing to provide such financing, are held back by legal lending limits.
Since 1998, credit union lending to member businesses has been subject to an arbitrary cap of 12.25% of total assets. The Small Business Lending Enhancement Act (S.509/H.R. 1418) currently before Congress would raise that lending cap to 27.5% of credit union assets. “This legislation makes good sense on Capitol Hill – and on Main Street,” argued Diana Dykstra, President and CEO of the California Credit Union League. “It’s time to turn on the financing spigot again for small businesses that are poised for growth, and credit unions have the funds and the expertise to make that happen.”
Before the passage of the Credit Union Membership Access Act of 1998, there was no limit to the amount that credit unions could lend to member businesses. The Small Business Lending Enhancement Act, which is supported by the US Treasury, would significantly increase the amount of money credit unions are allowed to invest in small businesses.
It has been estimated that by raising this lending cap to 27.5%, S.509/H.R. 1418 could help credit unions deliver as much as $13 billion in stimulus to American small businesses in the first year alone, while adding more than 140,000 new jobs to US payrolls. “And all of that at no cost to taxpayers,” Dykstra emphasized.
The responsible approach to lending taken by most credit unions has enabled them to largely steer clear of the economic crisis. Now, these financial institutions are solidly positioned to provide business loans that are safe, sound and desperately needed by small businesses around the country. “This proposed legislation,” Dykstra suggested, “would enable credit unions, which have valuable experience in business lending, to open the door to more small businesses – at just the right time.”
Dykstra encouraged cooperatives across all sectors to contact their representatives and express support for the Small Business Lending Enhancement Act S.509/H.R. 1418. Thousands of credit unions will be visiting Washington, DC about this issue during the week of March 19, so time is of the essence. To express your support, go to www.connectforthecause.org and click under the Current Issue, “Help Credit Unions Create 140,000 New Jobs!”