Read more at the Washington CU Daily
Two House members have introduced legislation that would lift the member business lending cap during the pandemic in an effort to allow credit unions to make more loans during the economic crisis.
Reps. Brad Sherman (D-Calif.) and Brian Fitzpatrick (R-Pa.) introduced legislation Monday that would lift the cap of 12.25% for up to one year after the national emergency has ended. The exemption prohibits any business loan that would undermine the safety and soundness of a credit union.
Credit union trade groups have pushed for such an exemption throughout the coronavirus crisis, while banking trade groups in the past have said the restriction should stay in place.
“In an emergency, many businesses won’t have the time to establish a relationship with a new lender,” Sherman said. “This legislation represents a tailored approach to giving credit unions the flexibility they need to assist their small businesses members struggling as a result of COVID-19.”
Fitzpatrick said the legislation “would ensure that our community credit unions have the maximum flexibility necessary to provide their small business members with the credit access, support, and hope they need to survive the pandemic.”
CUNA and NAFCU quickly endorsed the legislation.
“Thanks to Reps. Sherman and Fitzpatrick for their bipartisan introducing this to ensure that all available business credit is deployable during and after the pandemic so small businesses can get back to business and Main Street communities can recover quickly,” CUNA President/CEO Jim Nussle said.
“Credit unions have long sought to provide essential loans to small businesses – including many owned by minority populations – more so than their counterparts in the banking industry,” NAFCU President/CEO B. Dan Berger said.