Increasing loan limit would help small business, economy

By Robert and Faith Newton

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Approximately three years ago, our company, Troy Elevator Inc., needed long-term financing due to several factors, some of which were beyond our control. We applied for financing at a number of banks, but were turned away for various reasons.

Thankfully, Community 1st Credit Union came to our rescue and provided us a guaranteed loan through the USDA Rural Development Loan Program.

Thanks to our credit union, we were able to keep our business in operation and keep our 40 employees working. Unfortunately, Community 1st - and many other Iowa credit unions - may not be able to make a loan to the next business owner in need. This problem stems from a federal cap on the amount of business loans credit unions can make.

In 1998, Congress restricted any credit union from making business loans exceeding

12.25 percent of its assets. Before 1998 - for over 90 years - credit unions made businesses loans and there was no such restriction.

Now more than ever, Iowans, like us, are turning to credit unions for their small-business lending needs. Iowa credit unions could do even more if given the opportunity, which would be very helpful as many banks have pulled back on their lending.

The current debate in

Congress over how to best stimulate economic growth and inject capital into small businesses is shining a light on a piece of legislation that fixes the problem facing credit unions and small businesses. S. 2231 would raise the credit union member business lending cap to 27.5 percent.

As it stands today, Iowa credit unions that are at or nearing the 12.25 percent cap are forced to turn away small-business owners in need of a loan, even though the small businesses would otherwise qualify. By increasing the lending cap, Congress has the opportunity to inject a substantial amount of credit into the small business lending market.

It is estimated that this provision would make approximately $13 billion of additional, reasonably priced credit available to the nation's small businesses in the first year while generating more than 140,000 jobs. In Iowa, this would amount to approximately $198 million in new lending and more than 2,000 jobs.

Small businesses like ours need the help of all lenders - and all types of lenders should have the ability to help us. The solution presented by S. 2231 doesn't cost taxpayers a dime, it's bipartisan legislation, and it's common sense.

We urge Senators Tom Harkin and Chuck Grassley to help Iowa's small business owners and American workers by voting for S. 2231, the Credit Union Small Business Jobs Bill.

Robert and Faith Newton operate Troy Elevator Inc. in Bloomfield. Comments:

rnewton@troyelevatorinc.com or fnewton@troyelevatorinc.com.