In a new legal opinion letter to Community First Credit Union in Jacksonville (FL), NCUA updated its definition of a "fleet" as the agency viewed its current definition as overly restrictive.
John Hirabayashi, President and CEO of Community First CU, stated that NCUA's definition of fleet hampered a credit union’s ability to establish relationships with small businesses.
NCUA had previously defined the term "fleet" to mean two or more vehicles used to deliver a product or service integral to business. The new definition is five or more vehicles that are centrally controlled and used for a business purpose, including for the purpose of transporting persons or property for commission or hire.
NCUA based its new definition upon auto industry standards and the Internal Revenue Service's definition of a fleet.
This means that a credit union making vehicle loan to a member with fewer than five vehicles will not have to comply with the maximum loan-to-value ratio for member business loans of 80 percent.
This revised definition will provide credit unions with greater flexibility in making vehicle loans to their members for business purposes and allow credit unions to pursue small business customers.
Read the letter.
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