Entrepreneurs, take note. Credit unions may soon be able to lend more money to small businesses, according to media reports.
Right now, credit unions are not allowed to lend more than 12.25% of their total assets. But a bill that was introduced in the U.S. House of Representatives on July 29 will allow credit unions to lend as much as 25%.
This could free up an extra $10 billion of capital for small businesses and commercial loans, and if it makes the credit unions more competitive with the banks, everyone would benefit from the increased lending.
The bill is a bipartisan effort by Paul Kanjorski (Pennsylvania-D) and Ed Royce (California-R). As they point out in a letter to the Credit Union National Association, "When other lenders have been forced to pull back lines of credit, credit unions have continued to lend and they have the capacity to do more. For example, last year when the residential mortgage market came to a virtual halt, credit unions actually increased their lending."
Obviously, there are a lot of the usual hurdles to clear before this bill becomes law. But if you're a small business owner who has been hoping to grow your business with the help of a commercial loan, this could give you some hope. And these days, that's worth something.
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