WASHINGTON—The importance of the credit union tax exemption in separate letters to the House Appropriations Subcommittee on Financial Services and General Government and the Senate Finance Committee ahead of their hearings on the president’s fiscal year 2025 budget proposal.
In the letters, signed by America’s Credit Unions President/CEO Jim Nussle, the trade association said the tax exemption allows credit unions to provide lower cost services to consumers while providing outsized economic value.
“Credit unions provide significant financial benefits to both their members as well as nonmembers,” Nussle “According to America’s Credit Unions’ analysis of NCUA and DataTrac data, credit unions provide $21.5 billion in total financial benefits annually to consumers and communities across the country through higher returns on savings and returns, lower loan rates, and fewer fees.”
Request for Increased Funding
In both letters, Nussle called for increasing funding for the Community Development Financial Institutions (CDFI) Fund to $500 million from $325 million, and further stated America’s Credit Unions’ support for the budget’s proposed $500 million for the CDFI Bond Guarantee Program, which provides CDFIs better access to low-cost, long-term, fixed-rate capital.
Additionally, Nussle said America’s Credit Unions supports the $325 million budgeted for the Financial Crimes Enforcement Network, while requesting an increase for the NCUA’s Community Development Revolving Loan Fund. The budget currently proposes $4 million, while the organization supports a $6 million budget.
Congress released an agreement Thursday on funding several parts of the federal government through the end of FY24.
Concerns Over SBA Program
Separately, concerns over granting the Small Business Administration (SBA) new direct lending abilities were shared with the Senate and House Small Business Committees by America’s Credit Unions.
Both Committees held oversight hearings with SBA Administrator Isabel Guzman last week.
“Direct lending by the SBA would drive up program costs and disincentivize 7(a) authorization within financial institutions, draining the value of the public-private partnership,” wrote Nussle. “Further, by becoming a direct lender to small businesses, the SBA is likely to harm local financial institutions’ relationships with small businesses and possibly hamper these businesses from establishing important banking relationships that can only help their business survive and flourish by meeting all of their financial service’s needs.”
CU Commitment Highlighted
Nussle highlighted credit unions’ commitment to providing credit to small businesses across the nation, regardless of size. “Over the past eight years, the percentage of small business loans made by credit unions has far outpaced other lenders,” he wrote.
In addition, he offered support for the Member Business Loan Expansion Act, which he said would make it easier for credit unions to offer loans under $100,000 by ensuring these loans do not count toward the arbitrary credit union member business lending cap.
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