Removal of MBL cap would be ‘boon to small town America’
Lifting the credit union member business lending (MBL) cap would help small businesses and low-income families disproportionately impacted by the lockdowns, Young Voices’ John Kristof wrote this week on the Foundation for Economic Education site. Noting that the country is in a recession and Congress is in a “fiscal gridlock,” he says billions in capital could be freed up by simply lifting the MBL cap currently set at 12.25% of assets.
“The cap leaves billions of dollars of potential loans to businesses off the table. In an analysis of FDIC and National Credit Union Administration call data, the Credit Union National Association estimates that, if the MBL cap were lifted, credit unions would lend an additional $5 billion “in capital to small and informal business ventures” over the next year,” he writes. “Another $5 billion to small businesses and entrepreneurs could translate to 50,000 jobs created over the same period.”
The article notes that these funds are for the most part economic opportunities unique to credit unions, as opposed to loans “stolen” from banks, as Small Business Administration research shows that 81% of business loans given by credit unions would not have been given by traditional banks.
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