Friday, April 16, 2010

Fact Checking Business Lending Legislation Ad

The Texas Credit Union League ran an ad in Roll Call calling for the member business lending (MBL) cap be lifted. The ad asks the following question: "Will Congress help small businesses get access to capital?" and focuses on the story of bagel shop owner Suzanne Herman. She was not able to get financing until she got an Small Business Administration's (SBA) Patriot Express loan from Randolph-Brooks.

However, this ad selectively neglects to mention some other facts.

First, the ad neglects to point out that the guaranteed portion of an SBA loan does not count against the aggregate business loan cap.

Second, Randolph-Brooks FCU, which originated the business loan, is no where near the aggregate business loan cap. The credit union has $154.3 million in business loans and $3.75 billion in assets. This translates into a member business loan to asset ratio of 4.11 percent, which is well below the aggregate member business loan cap of 12.25 percent of assets.

So, what this tells me is that there is no need for Congress to act. This credit union has plenty of options to meet the credit needs of its small business customers.


  1. I'm Winter with the Texas Credit Union League.

    Unsurprisingly, you missed the point of the ad the Texas Credit Union League ran in Roll Call. The Bagel Factory is precisely the type of business that banks continue to turn away - and why more and more groups like the National Association of Realtors, the National Association of Manufacturers, the American Competitive Institute, and LULAC are calling for the restoration of credit union lending powers for small businesses.

    The story was the same for the other ad in Roll Call you didn't mention - the day care center, whose founders went to every single bank in El Paso, Texas, but were turned away 6 years ago. This was before any bank had the Great Recession to blame.

    Fortunately, they found the help they needed - at a credit union.

    During this crisis, the search for an alternative sources for capital has intensified with the failure of CIT and the tightening of credit at banks around the country. Business owner after business owner has come into credit unions looking for solutions because lines of credit have been withdrawn from their traditional lender. Calls are pouring into Congressional offices asking for help to get the engine of small business the fuel needed to restart the job market and change the face of this "jobless recovery."

    Credit Unions, who never had a cap on business lending until 12 years ago, stand ready to serve the needs of their business members - as they have for 75 years.

  2. Winter:

    First, let me say thank you for identifying yourself.

    I did not mention the ad about the day care center; because I did not see it.

    I believe that credit unions still have ample authority under existing law to serve small businesses without raising the cap.

    Lifting the cap and increasing the dollar threshold of what counts as a member business loan will allow more credit union resources to be targeted at larger commercial loans, not small businesses.



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