Credit Unions Seek Broader Business Loan Powers

WASHINGTON - In a move that could invite another fight with the bankers, a bill introduced in the House last month would encourage greater member business lending by credit unions.

The bill would facilitate more MBLs guaranteed by the Small Business Administration by, among other things, excluding all portions of SBA-guaranteed loans from the current 12.25% of assets MBL cap. Currently, only the guaranteed portion of these loans are excluded from the cap.

The measure would also create an SBA outreach program for CUs-one of the fastest growing providers of SBA loans - to provide a simplified application process for CUs. Introduced in he House Small Business Committee, the bill is heavily backed by both NAFCU and CUNA.

The bill, coming a few weeks after the introduction of CURIA, which would boost the MBL cap to 20% of assets, is sure to rankle the banking lobby, which is fighting to restrict credit unions' participation in the small business loan market. The bankers have already attacked the proposed increase in the MBL limit, ostensibly because of the threat to the safety and soundness to credit unions it would pose.

Business lending is one of the fastest growing areas of credit union services, far outpacing auto loans and even mortgage loans.