Navy Federal Credit Union in Vienna, Va., has established a commercial loan participation program in which it will buy business loans from other credit unions that are nearing their cap on business lending.
Navy Federal said Monday that the program, dubbed C-Pal, is available to all credit unions nationwide that want to continue to grow their business lending but are hamstrung by federal rules that cap business loans to members at 12.25% of assets. Navy Federal is the world's largest credit union, with $49 billion of assets, 221 branches and roughly four million members.
"We are ready to help credit unions who are nudging close to their commercial loan caps," Jim Salmon, Navy Federal's executive vice president of business services, said in a news release. "By partnering with other credit unions, we hope to bring some relief to an ever-increasing problem."
Sens. Rand Paul, R-Ky., and Mark Udall, D-Colo., introduced a bill earlier this year that would raise credit unions' business lending cap to 27.5% of assets, but the Senate's Democratic leadership unexpectedly delayed the bill in April, citing a busy Senate schedule.
Most credit unions support raising the cap, but the banking industry strongly opposes giving credit unions any more business lending authority.
"This is a timely and responsive move," Salmon added. "We're here to help other credit unions continue to serve their members in their business ventures."