Federal legislators are back home this week on a recess and work period tied to the Easter and Passover holidays.
But according to Richard Gose, CUNA's senior vice president for political affairs, the lawmakers will hear from small business leaders and entrepreneurs in their communities who support credit union efforts to lift the cap on CU member business lending.
“The bottom line is that is not just an issue for credit unions but for small businesses that need access to loans,” Gose said.
CUNA has been reaching out to the small business community in a number of areas and Gose said lawmakers would hear from small businesses that were able to get loans from CUs where they could not from banks, as well as from small businesses who have not been helped by banks and are looking for an alternative.
Also, the association has some numbers to challenge the bankers' claim that very few credit unions are impacted by the cap.
CUNA Chief Economist Bill Hampel said that at least 500 credit unions are impacted by the cap. Roughly 137 CUs have member business loans worth over 10% of their asserts up to and above the 12.25% cap, Hampel said, adding that for these credit unions it will have become very difficult to make member business loans or even renew existing lines of credit for the business members.
CUNA terms these CU's “at the cap.” These credit union's MBL programs are characterized by negative loan growth, Hampel added.
Another 167 credit unions that CUNA termed “approaching the cap” have MBLs of between 7.5% and 10% of their assets and Hampel said these credit unions are still making member business loans but have started to have to be cautious and strategic about which members they will be able to serve. They have seen their member business loans grow at 9.5% per year.
The lowest tier CUNA termed as under “initial constraint” by the cap. These 207 credit unions had MBL levels of between 5% and 7.5% of their assets and had begun to keep track of the loans with an eye on the cap but still had business loan growth of almost 31% last year.
“Member business loans are the fastest-growing segment of credit union lending,” Hampel said.
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