Why Cap Growth?

As the end of the year fast approaches, there is a lot of work left for Congress to do. Getting the budget in fiscal order is imperative and represents the single most important item to address. However, once the budget is put on safe financial footing, the long-term key to balancing the budget is having sustained economic growth, investment and job creation -- and to accomplish all of this without increasing federal spending. The key for Congress is finding these pro-growth, deficit-free ideas.One such idea is the Credit Union Small Business Lending Bill, S.2231, which allows credit unions to provide more loans to small businesses, effectively raising the current credit union lending cap from 12.25 percent to 27.5 percent of assets.

Why can't small businesses get financing? Keeping the cap on credit union lending maintains an economic barrier to competition that protects banks that are "too big to fail" and maintains the bank's 95 percent market share of small business lending. But banks are not lending. Last year, banks rejected60 percentof small business loan applications, and they reduced small business loans by 20 percent during the last recession. Given the upside-down real estate market, small businesses cannot substitute for home equity loans. Without capital, small businesses do not expand, entrepreneurial dreams are put on hold and jobs are not created.

Small business expansion is the key to sustaining future economic growth, accounting for60-65 percentofjobs createdin previous cyclical rebounds. The currently slow economic expansion and stubbornly high unemployment rate are in large part due to the inability of small businesses get adequate access to capital for investing and expanding operations, and that is slowing job creation.