In honor of National Small Business Week and with all the recent discussion about small business lending initiatives on Capitol Hill, I thought it was an opportune time to shine some light on the longstanding relationship between credit unions and small businesses.
For decades credit unions -- not-for-profit, member-owned financial institutions -- have prided themselves on the close ties they have with their members, both individuals and small business owners alike.
Credit unions have consistently demonstrated their commitment to small business members' needs. At year end 2009, credit unions had over 142,000 loans outstanding, totaling over $28 billion to their members -- nearly an 11 percent increase from 2008. Credit unions would like to do more. Unfortunately, due to an antiquated and arbitrary 12.25 percent cap, credit unions' member business lending ability is restricted. While there are a number of credit unions at or approaching the cap, many have capital to lend but have not maximized their business lending programs because of this artificial and arbitrary limitation on these programs.
We are extremely disappointed that the administration has yet to forward legislation that would recognize credit unions as part of the solution for the small business credit crunch. We appreciate only too well the challenges our small business members are facing during these difficult economic times. In fact, credit unions have been widely recognized for their prudent business practices and not causing our nation's economic turmoil.
Currently, there are two bills in Congress that call for the easing of this cap -- H.R. 3380, the Promoting Lending to America's Small Businesses Act, and S. 2919, the Small Business Lending Enhancement Act of 2009. It would seem to be a natural extension of President Obama's desire to help small business and create jobs to include either of these measures as part of legislation to promote employment and stimulate the economy.
At the National Association of Federal Credit Unions (NAFCU), we realize that the strength of our nation's economy and labor force is inextricably tied to the health and well-being of small business. By raising the arbitrary 12.25 percent member business lending cap on credit unions, President Obama does not have to allocate any new funds but simply allow credit unions to lend more to small businesses.
Lifting the member business lending cap on credit unions, through either S. 2919 or H.R. 3380, represents a win for small business, our nation's economy and the taxpayers.