The National Credit Union Administration on Wednesday approved new restrictions on business lending.

The rule, which enforces a law enacted Aug. 7, prohibits credit union business lending that exceeds the lesser of 1.75 times net worth or 12.25% of total assets. Business loans for less than $50,000 are excluded from the cap, however.

Several types of credit union will be exempted from the business lending limit, including those designated as "low-income" and those chartered primarily to make business loans. Also eligible for exemption are credit unions that, at any point from 1995 to 1998, had business loans totaling at least 25% of all outstanding loans or that made more business loans than any other type of loan.

Fewer than 70 of the 11,125 federally insured credit unions would qualify for an exemption, the NCUA said. Credit unions that exceed the business lending limit but do not qualify for an exemption will have three years to get below the cap.

The interim final rule takes effect upon its publication in the Federal Register, but the NCUA will accept comments for 60 days.

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