Wasington, D.C. (March 24, 2025) |
Today, the Defense Credit Union Council (DCUC), reaffirmed its support of the Veterans Member Business Loan Act (VMBLA) and urged the House Financial Services Committee (HFSC) to eliminate the outdated credit union member business loan (MBL) cap, citing its restriction on small business growth and veteran entrepreneurship.
In its letter to Chairman Hill and Ranking Member Waters, DCUC shared how lifting the 12.25% MBL cap would inject billions into small business lending, creating up to 140,000 jobs in two years—at no taxpayer cost.
“I write in connection with your March 25 hearing, ‘Beyond Silicon Valley: Expanding Access to Capital Across America,’” said Jason Stverak, DCUC Chief Advocacy Officer. “DCUC appreciates the Committee’s focus on improving access to capital for all Americans. We firmly believe that one of the most impactful steps Congress can take is to eliminate the outdated credit union member business loan (MBL) cap, thereby unleashing the full potential of credit unions to support small businesses and entrepreneurs across the country.”
DCUC shared how this reform would also benefit veteran-owned businesses, which face higher loan denial rates and over-reliance on personal savings.
“…Alarmingly, the share of U.S. businesses owned by veterans has been declining – from 11% of all businesses in 2014 down to just 8.1% in 2020,” the letter stated. “This trend is troubling and points to the significant barriers veterans face in starting and growing businesses.”
DCUC’s letter outlined research supporting the need to address the financial barriers and hurdles veterans face as aspiring entrepreneurs and when accessing capital:
- Higher Loan Denial Rates: Veteran business owners tend to apply for credit more frequently than their non-veteran peers, yet are denied loans at significantly higher rates by traditional financial institutions.
- A joint Small Business Administration/Federal Reserve study found that veterans submitted more loan applications per business but were approved less often and for smaller amounts than non-veterans – a clear indicator that many creditworthy veteran entrepreneurs aren’t getting the financing they need through banks. This inequity stifles not only the ambitions of veteran entrepreneurs but also the jobs and economic activity their businesses would support.
- Over-Reliance on Personal Savings: With credit harder to obtain, veterans often must fall back on personal funds.
- 72% of majority-veteran-owned firms use personal or family savings as a source of startup capital, compared to 62% of non-veteran firms. This greater reliance on personal savings shows that veterans are risking their own financial security to launch businesses. It also means many veteran-owned startups begin under-capitalized, limiting their growth potential and leaving the owners and their families more financially vulnerable.
- Shorter Credit Histories and Less Formal Banking Experience: Many service members transition out of the military without an extensive credit or banking history in the civilian world. They may not have had the opportunity to build the kind of credit profile that traditional lenders look for, or they may lack collateral, despite their excellent skills and reliability.
- According to the National Survey of Military-Affiliated Entrepreneurs, veterans often feel less prepared for the financial aspects of business ownership after years in uniform, leading some to avoid traditional financing or resort to predatory lenders with exorbitant rates.
"Defense credit unions are uniquely positioned to support veteran entrepreneurs, offering mission-focused financial services tailored to the military community. However, the current MBL cap restricts even the most dedicated credit unions from fully assisting veteran-owned businesses,” says Anthony Hernandez, DCUC President/CEO. “Lifting this cap—especially for veteran entrepreneurs—is a bipartisan, common-sense solution that will create jobs and strengthen our economy. The Veterans Member Business Loan Act is a crucial step in ensuring that those who bravely served our country are not disadvantaged when they return home and seek to build their businesses."
DCUC urges Congress to act swiftly to empower credit unions to better serve America’s entrepreneurs. See more about DCUC’s position on this at dcuc.org.