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Monday, March 1, 2010

Credit Union Member Business Loans

Pauline Smale
Analyst in Financial Economics

The credit union industry has long advocated for relief from statutory restrictions on business lending activities. Credit unions can make loans only to their members, to other credit unions, and to credit union organizations. Specific restrictions on business lending include an aggregate limit on an individual credit union's net member business loan balances and on the amount that can be loaned to one member. 

Industry spokesmen have argued that the current economic climate reinforces the argument for regulatory relief from limitations on member business loans. The current financial crisis has resulted in a contraction of credit available to small businesses in most sectors of the U.S. economy. Easing the restrictions on member business lending could increase the available pool of credit for small businesses. 

The past two Congresses considered but did not pass legislation providing additional lending authority. The banking industry has generally opposed legislation that would increase the powers of credit unions. Current legislation, the Promoting Lending to America's Small Businesses Act of 2009 (H.R. 3380) and the Small Business Lending Enhancement Act of 2009 (S. 2919) would provide credit unions with expanded business loan authority

Date of Report: February 17, 2010
Number of Pages: 7
Order Number: R40793
Price: $29.95

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