WASHINGTON, DC (June 18, 2013) National Association of Federal Credit Unions (NAFCU) salutes the 50th anniversary of National Small Business Week, June 17-21, sponsored by the Small Business Administration. Credit unions, many of which are small businesses themselves, are pivotal partners for the nation's small businesses.
“Small businesses are the engines that drive our economy and our nation’s financial well-being is integrally tied to their success,” said Fred Becker, NAFCU president and CEO. “Credit unions are a key source of credit to entrepreneurs and businesses on Main Street in helping America's economy thrive. In fact, credit union member business lending has grown because credit unions are a popular choice for today's capital-constrained small businesses.”
Business lending from federally insured credit unions rose 1.4 percent for the first quarter of 2013 and has increased 6.2 percent since March 2012. The average credit union member business loan has grown as well, from $202,000 in 2012 to $206,000 in March 2013. Credit unions also provide a much-needed counterpoint to larger banks for small business owners, not only through better loan terms, but through availability, as noted in a 2011 study by the SBA's Office of Advocacy that found credit unions' business lending not only offset declines in bank small business lending during and after the recession, but fills the gap where bank lending to small businesses is minimal or non-existent. While bank loans to small businesses have shrunk by 14.3 percent since mid-year 2007, credit union member business loans have grown by 77.7 percent (please refer to the chart attached).
“Credit unions know their members well and are able to work with them to provide the most appropriate business loan for their unique situation,” said Becker. “However, credit unions are constrained in their efforts by an outdated cap on the amount of business loans they can provide. Increasing the credit union MBL cap – an important part of NAFCU’s five-point plan for regulatory relief – would help small businesses get more of the credit they need and, in turn, help boost jobs and economic growth.”
H.R. 688 and S. 968, the Credit Union Small Business Jobs Creation Act, introduced by Reps. Ed Royce, R-Calif., and Carolyn McCarthy, D-N.Y., in the House, and by Sen. Mark Udall, D-Colo. in the Senate, would lift the arbitrary member business lending cap from 12.25 to 27.5 percent of total assets.