WASHINGTON—Legislation was introduced Thursday in the Senate that would raise the current cap on credit union member business lending.
The Small Business Lending Enhancement Act of 2015, sponsored by Sens. Rand Paul (R-KY), Sheldon Whitehouse (D-R.I.), and Jack Reed (D-R.I.), would increase the lending cap to 27.5% of assets, up from 12.25% today.
“Raising the arbitrary credit union member business lending cap is a win-win-win for small businesses, credit unions, and consumers,” said NAFCU President and CEO Dan Berger. “NAFCU applauds Senators Paul and Whitehouse for their bipartisan leadership in introducing this important legislation that would unleash additional capital and create jobs without burdening American taxpayers.”
CUNA estimates the legislation would help create 152,200 jobs within the first year of enactment and would generate a first-year increase in capital of $14 billion.
“The Small Business Lending Enhancement Act of 2015 would help spur the nation’s economy by allowing small businesses greater access to credit union capital,” said Jim Nussle, president/CEO of CUNA. “I thank Sens. Paul, Whitehouse and Reed for their leadership and commitment to introducing legislation that will help credit unions and small businesses create new jobs across the country.”
The bill would allow NCUA to raise a credit union’s MBL cap from the current limit provided the institution:
• Has met at least 80 percent of its current cap for the past four consecutive quarters
• Is classified as “well capitalized”
• Can demonstrate at least five years of experience of sound underwriting and servicing of MBLs
• Has the requisite policies and experience in managing MBLs
• Has satisfied other standards which the NCUA Board “determines are necessary to maintain the safety and soundness of the insured credit union”
Thursday's bill is similar to S. 968, the “Small Business Lending Enhancement Act of 2013,” a bipartisan measure introduced last Congress by Sen. Mark Udall, D-Colo., and cosponsored by Sens. Paul and Whitehouse. Raising the MBL cap is a key component of NAFCU’s five-point plan for credit union regulatory relief.