The introduction of the Veterans Member Business Loan Act (VMBLA) in Congress represents a pivotal step toward empowering veteran entrepreneurs and bolstering the American economy. This bipartisan legislation aims to amend the Federal Credit Union Act to exclude loans made to veterans from the definition of a member business loan, thereby exempting these loans from the current cap imposed on credit unions’ business lending.
Understanding the current lending cap
Under existing regulations, credit unions are restricted by a member business lending cap set at 12.25% of their total assets. This limitation, established by the Credit Union Membership Access Act of 1998, constrains the ability of credit unions to extend business loans, particularly affecting veteran-owned small businesses seeking capital.
Challenges faced by veteran entrepreneurs
Veterans possess unique skills and experiences that make them well-suited for entrepreneurship. However, they often encounter significant hurdles in accessing capital. A report titled “Financing Their Future: Veteran Entrepreneurs and Capital Access,” published by the Small Business Administration and the Federal Reserve Bank of New York, found that veteran business owners applied for more funding and submitted more loan applications per business, yet were denied loans at a much higher rate than non-veteran business owners. This underscores a pressing need for accessible, small-dollar business loans tailored to the veteran community.
The role of credit unions
Credit unions have a longstanding commitment to serving their members, including veterans and military personnel. Their not-for-profit structure and community-focused approach position them ideally to support veteran entrepreneurs. However, the existing lending cap hampers their capacity to meet the financial needs of veteran-owned businesses. By exempting veteran business loans from this cap, credit unions would be better equipped to provide the necessary funding, fostering growth and innovation within the veteran business community.
Economic impact
Facilitating access to capital for veteran entrepreneurs has broader economic implications. Veteran-owned businesses contribute significantly to the economy, employing millions and generating substantial revenue. By enabling credit unions to offer more business loans to veterans, the VMBLA would stimulate job creation, enhance competition, and drive economic growth at both local and national levels.
DCUC’s advocacy
The Defense Credit Union Council (DCUC) has been a leading advocate for the VMBLA, collaborating with various stakeholders to promote its introduction and passage. DCUC emphasizes that removing the arbitrary lending cap aligns with the nation’s commitment to supporting those who have served in the military, providing them with opportunities to thrive in civilian life.
Conclusion
The Veterans Member Business Loan Act is more than a legislative proposal; it is a reaffirmation of our nation’s dedication to its veterans. By adjusting outdated financial restrictions, Congress has the opportunity to unlock the potential of veteran entrepreneurs, fostering a more inclusive and robust economy. It is imperative that lawmakers continue to prioritize the swift passage of the VMBLA, ensuring that those who have served our country have equitable access to the resources needed to succeed in business.