Washington (May 9, 2014) - The National Association of Federal Credit Unions (NAFCU) hails National Small Business Week, May 12-16, sponsored by the Small Business Administration. Credit unions, many of which are small businesses themselves, are essential partners for small businesses throughout the nation.
“Small businesses drive our economy, and our nation’s financial security depends on their success,” said Dan Berger, NAFCU’s president and CEO. “Credit unions are a vital source of credit to entrepreneurs and businesses on Main Street that greatly contribute to America’s prosperity and job growth.”
Credit unions continued to lend to their small-business members as other financial institutions shied away from business lending during the economic downturn. A 2011 study commissioned by the Small Business Administration’s Office of Advocacy found that during the 2007-2010 financial crisis, credit union business lending increased as a percentage of assets as banks’ small-business lending declined.
Even today, credit unions are continuing to help small businesses. Credit union small-business loans grew to $45.9 billion, by 10.2 percent, in the 12-month period ending last December. By contrast, banks’ small-business loans were down 0.3 percent to $652.7 billion in the same period. Since 2007, credit union member business loans grew 86.6 percent while bank lending to small businesses shrank 14.1 percent.
Credit unions are constrained in their efforts to provide credit to America’s small businesses due to the outdated member business lending cap. However, there have been key pieces of legislation introduced in Congress that would help credit unions get the relief they need.
H.R. 4226, the “Credit Union Residential Loan Parity Act,” introduced this March by Reps. Ed Royce, R-Calif., and Jared Huffman, D-Calif., would exempt certain residential loans from the credit union member business lending cap. This new bill is in addition to H.R. 688, the “Credit Union Small Business Jobs Creation Act.” Introduced by Royce and Rep. Carolyn McCarthy, D-N.Y., this bill would raise the credit union MBL cap from 12.25 percent to 27.5 percent of assets.
The National Association of Federal Credit Unions is the only national organization that focuses exclusively on federal issues affecting credit unions, representing its members before the federal government and the public.