WASHINGTON–During testimony before the House yesterday, Sonya McDonald, EVP and chief lending officer with Randolph-Brooks FCU, called on Congress to eliminate barriers to credit unions making additional business loans.
Brooks, who was testifying on behalf of NAFCU, was among the witnesses before theHouse Small Business Subcommittee as part of a hearing entitled, "Strengthening SBA's 7(a) Loan Program. She offered similar comments before the House Small Business subcommittee in 2017, as well.
During her testimony, Brooks detailed how the changes proposed in the Small Business 7(a) Lending Oversight Reform Act of 2018 (HR 4743) could strengthen oversight of the program and help credit unions and American consumers.
Brooks, who noted she oversees a $6.6-billion portfolio that encompasses consumer, mortgage and commercial lending, including $23.6 million in SBA loans, told the subcommittee the cap on member business loans at credit unions is hurting consumers and credit unions alike, but also noted the government guaranteed portions of SBA loans do not count toward the member business lending cap, but the non-guaranteed portions do.
“This could ultimately lead to a situation where a credit union may be an excellent, or even preferred, SBA lender and ultimately have to scale back participation in SBA programs as they approach the arbitrary cap,” Brooks testified. “This would likely hit SBA Express loans first, as those have lower guarantees and thus may have a bigger impact on money available below the cap.”
Brooks cited a Treasury study that found “…credit union’s business lending currently has no effect on the viability and profitability of other insured depository institutions,” and a separate SBA study that indicated the “need” for lifting the MBL cap.
“We would urge the Committee to support legislation to remove the arbitrary cap on credit union member business lending,” said Brooks.
Brooks also pointed to the Memorandum of Understanding signed by NAFCU and the SBA that has a goal of increasing the number of credit unions offering SBA loan products.
For Brooks’ full testimony, here are the prepared remarks.