Sen. Udall speaking on the Senate floor on July 13 cited the case of Stacy Hamon to justify the expansion in the credit union’s business lending authority.
One Coloradan that I was particularly compelled by was named Stacy Hamon. Stacy is a small business owner in Thornton, Colorado, who started her own business: 1st Street Salon. Initially, Stacy went to a traditional bank, only to be turned away because credit was in short supply. To make the dream of owning her own business come true, Stacy turned to a credit union, which gave her the loan she needed through a second mortgage on her home. Stacey’s salon has become successful. And when I visited she had plenty of business and had even hired more workers. Those are real American jobs and a shining example of economic expansion that would not have been possible if it weren’t for a credit union that was willing to offer her a small business loan.
However, the Federal Credit Union Act exempts a loan that is fully secured by a lien on a 1- to 4-family dwelling that is the primary residence of a member from the definition of a member business loan. As a result, this loan, which was made to Stacy Hamon, does not count against the aggregate member business loan limit.
Moreover, business loans with a value less than $50,000 or with a governmental guarantee, such as Small Business Administration (SBA) loans, are excluded from the definition of a member business loan and the calculation of the aggregated member business loan limit.
These exemptions from the definition of a member business loan give credit unions sufficient authority to meet the credit needs of small businesses.