Raising the Cap on Small Business Lending For Credit Unions -What's Not to Love ?

Have you ever had someone make a decision and as you watch it unfold you can’t help but wonder, “What are they thinking?” Well, I had that same thought as I was reading the paper about how 130,000 people lost their jobs in July and we are still arguing over wither credit unions should be allowed to lend more to small businesses. This seems like a no brainer as some experts believe that improved business lending potential for credit unions could create more than 100,000 new jobs, and inject $10 billion into the economy, and all at NO cost to taxpayers.


Now, I understand that if someone works for a bank they might object. I mean I get that…they are thinking about their piece of the “turf” but that type of thinking is short sighted and they are missing the big picture on this. Each dollar that is spent in helping small businesses has a multiplier effect.


For example, we give 50,000 to a small landscaping company. They hire two workers who then take their next paycheck and start to do the things we all do. They take their families to the movies (movie theater owner is happier) then go get hot dogs (hot dog stand owner is happy) and money flows into our local community. As businesses bring back workers it enables others to benefit from the dollars that are spent in the community. Even banks themselves would benefit as new workers look to refinance existing debt or make new purchases which the banks could compete for. Everyone wins.


This has to be a new concept that bankers are not aware of, right? Actually this is old news. Credit Uunions were authorized under federal law more than 75 years ago in the crucible of the Great Depression. Back then the solution was to get people back to work. Get businesses growing? The same solution holds true today. If you look at the big picture there is no public policy reason not to permit credit unions to do more lending to their members who own or want to start small-businesses.


In fact, credit unions have proven for years they are capable of making these types of loans safely and soundly. During this latest "Great Recession," while BigBanks took millions of dollars in TARP money they also contracted their business lending. Meanwhile, credit unions have continued to serve their member owners (those that work for small businesses and those who own small businesses). The value of being a member owner and in having a choice between some large bank and your locally credit union should not come down to the fact that small business owners are left to the mercy of some large national bank.


Practical Application:


If you own a small business, or if you want to start one, and you agree that credit unions should have more capacity to help you, call your senator and urge him or her to support Sen. Mark Udall's amendment to H.R. 5297, the Small Business Job and Credit Act of 2010.