Help credit unions help business

By Patrick Jury

On behalf of all Iowa small businesses and credit unions, we applaud the efforts of the congressmen who have signed onto the bipartisan legislation that would support credit unions' ability to jump-start lending to small businesses by $10 billion in the coming year.

This plan does not create any cost to taxpayers, nor does it expand the size of government.

Specifically, bipartisan federal legislation, H.R. 3380, the Promoting Lending to America's Small Businesses Act, and S. 2919, the Small Business Lending Enhancement Act, would give the country's more than 8,000 credit unions more capacity to make small business loans to their members.

This plan would no doubt have a positive impact for Iowa's small businesses that are finding it difficult to obtain credit due to the current credit crunch as well as the massive consolidation in the commercial banking arena. Moreover, those who are able to find commercial banks willing to lend often complain that the loan terms are much less attractive than they would be with additional lenders to choose from.

Since 1998, credit unions have been subject to an arbitrary member business lending cap, essentially equal to 12.25 percent of the credit union's assets. Before 1998, there was no statutory limit on credit unions' business lending.

Iowa credit unions have always practiced safe lending practices, and Iowans are turning to credit unions for more of their lending needs: Last year, small business loans made by credit unions grew by more than 17 percent. Iowa credit unions are in a position to do even more, allowing for greater capital expenditures, greater economic activity and job creation.

However, as Iowa credit unions reach the 12.25 percent cap, they are forced to turn away qualified business owners in need of access to capital.

By increasing the credit union member business lending cap, Congress has the opportunity to inject a substantial amount of less-expensive but available credit into the small business lending market. It is estimated that this provision would make approximately $10 billion of additional, reasonably priced credit available to the nation's small businesses in the first year while generating more than 100,000 jobs.

In Iowa, this would amount to approximately $137 million in new lending and more than 1,400 jobs.

Credit unions offer a viable solution to the credit crunch small businesses are experiencing. Our industry supports this bipartisan legislation to help small business owners. We urge Congress to seize this opportunity and provide a common sense reform in the midst of this economic crisis for small businesses.

Patrick S. Jury is president/CEO of the Iowa Credit Union League.