Four Missouri credit unions – including one in Springfield – are nearly maxed out on the amount of business loans they can make, and the Missouri Credit Union Association is asking for legislators’ help to increase the limits.
According to an MCUA news release, credit unions can now make business loans that equal 12.25 percent of total assets, but two bills – S.B. 509 in the U.S. Senate and H.R. 1418 in the U.S. House, propose raising the limit to 27.5 percent of assets for each credit union. The Senate bill is sponsored by Sen. Mark Udall, D-Colo., and 19 co-sponsors, and the House bill is sponsored by Rep. Edward Royce, R-Calif., and 48 co-sponsors.
Springfield-based Assemblies of God Credit Union now has a business loan portfolio of $13 million, and is faced with a cap of $13.3 million, which doesn’t leave enough room for new loans.
“We do have business loans for our members, but we’re actually capped out on that because of the regulatory limits,” said AGCU President and CEO Paul Ebisch, during a June 27 interview.
“It’s kind of a battle somewhat between the banks, I guess, and Congress and such,” Ebisch added.
As a proponent of credit union and community banking entities, Ebisch said national regulations restrict those institutions.
“I do believe we need strong roots in the community to build businesses, especially small businesses,” he said. “That’s who we focus on, small businesses or church business operations. That’s our bread and butter.”
MCUA also is asking for Congress to conduct an oversight hearing on the $30 billion in federal dollars granted to the banking industry in the Small Business Jobs Act of 2010 to stimulate small business.
The MCUA release describes the existing lending limit as an arbitrary cap imposed by Congress. On June 22, members of the U.S. House Small Business Committee participated in a hearing on small-business access to capital and credit.
The hearing featured testimony from Treasury Secretary Timothy Geithner, and in a letter submitted as part of the hearing record to Congressman Sam Graves, committee chairman, MCUA President and CEO Mike Beall encouraged support of the member business lending legislation.
“The Missouri Credit Union Association strongly supports both bills,” Beall said in the release. “Credit unions stand ready to do their part to facilitate economic recovery by deploying credit union resources to aid the small-business community in a safe and sound manner.”
AGCU is one of 31 Missouri credit unions that offer member business loans. As of March, the total number of business loans outstanding for all Missouri credit unions is $224.3 million, with average loan size of $163,685, the release said.
“This arbitrary limit has not only prevented much-needed capital from flowing to the entrepreneur community, but also acted as a disincentive to many credit unions in Missouri and across the country from offering this valuable option to their members,” Beall added. “The startup investment of staff and financial resources in creating a viable member business lending program is considerable, a reality that would be remedied by the proposed legislation.”
If the cap is raised, 1,676 new Missouri jobs could be generated, with $154.2 million in additional business loans anticipated in the first year, the release said. Nationwide, the higher cap would bring 140,000 new jobs and $13 billion in new member business loans.
Nationwide, it would bring 140,000 new jobs and $13 billion in new member business loans. MCUA, a trade association for 139 federally and state chartered credit unions with locations in Missouri, also has sent letters urging action to Missouri’s U.S. senators, Democrat Claire McCaskill and Republican Roy Blunt, the release said.[[In-content Ad]]
Adrianna Norris became a first-time business owner with the opening of Finley River Chiropractic; PaPPo’s Pizzeria & Pub launched its newest location; and Huey Magoo’s opened its second store in the Ozarks.