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CEI praises bill to raise credit unions’ member business lending cap to 27.5 percent

CEIThe Competitive Enterprise Institute on Tuesday praised legislation introduced by Sens. Mark Udall (D-Colo.) and Rand Paul (R-Ky.) to increase the credit union member business lending cap to 27.5 percent of assets for eligible institutions.

“The Udall-Paul bill will lift unjustified regulatory barriers on America’s credit unions,” John Berlau, the CEI’s senior fellow for finance and access to capital, said. “So it shouldn’t just be cheered because it’s bipartisan, but because it spreads freedom.”

Rohit Arora, the CEO of Biz2Credit small business loan service, said many big banks stopped giving small businesses credit following the housing crisis—a void that was filled by credit unions.

Arora also said, however, that government barriers to credit union lending prevent many small businesses from obtaining the credit needed to grow.

“Credit unions are handcuffed by a lending cap of 12.25 percent of their assets imposed  by the Credit Union Membership Access Act of 1998,” Arora said. “Thus, many of  those who became active in small business lending quickly hit their limit.”

The Small Business Lending Enhancement Act, S. 968, would authorize the National Credit Union Administration to increase the MBL cap from the current level of 12.25 percent of assets to 27.5 percent for institutions that are well-capitalized, have stayed at or above 80 percent of their current MBL cap for the past four consecutive quarters, have five or more years of MBL experience, have implemented policies and have experience in MBLs and have satisfied NCUA’s other standards.

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