Small Business Lending Enhancement Act
New York Senator Charles Schumer is one of a growing number of people that believe that an increase in the amount credit unions can lend to small businesses will make a difference to the economy as a whole. As a result, he is co-sponsoring a bill to allow credit unions to make more small business loans. Credit unions are currently limited from lending to small businesses in excess of 12.25% of their assets. The new bill, titled The Small Business Lending Enhancement Act, would raise that cap to 25% of total assets and increase the minimum business loan subject to the cap from $50,000 to $25,000. The new bill reportedly has bipartisan support in both the U.S. House and Senate, and is currently being reviewed by both chambers.
Over the past 15 years, nearly two-thirds of all new jobs created in the United States were generated by small businesses. Yet throughout the recent economic crisis, small businesses have struggled to find the credit they need to expand. Due to the broadness of the financial crisis, many banks have been forced to tighten their lending, leaving a gap to be filled by credit unions that are frequently unable to fill the gap as a result of current lending restrictions. These are the issues that the Small Business Lending Enhancement Act is intended to confront.
"Our focus must be on increasing the lending to small businesses, which are the lifeblood of our economy. They have not only been a casualty of the ongoing credit crisis, but have unduly felt its impact," Sen. Schumer said. "The situation facing these businesses right now is much worse than a matter of them simply being denied new loans. They are being strangled by having existing lines of credit pulled. A threat like this to small businesses could upend the livelihood of millions of workers and be catastrophic for the larger economy."
Some sources indicate that the bill still faces opposition from the Independent Community of Bankers of America, a trade association that specializes in small banks, who feel that the proposal does not fit the tax-exempt mission of credit unions. They argue that credit unions have not even come close to hitting the existing limits, so the new bill provides no promise of a brighter future.
Opinions will continue to differ, but the real question remains: How much impact will this bill have on small businesses? Yes, there are businesses in need of credit, but is the extent of the credit problem an issue that truly requires new legislation?
Over the past 15 years, nearly two-thirds of all new jobs created in the United States were generated by small businesses. Yet throughout the recent economic crisis, small businesses have struggled to find the credit they need to expand. Due to the broadness of the financial crisis, many banks have been forced to tighten their lending, leaving a gap to be filled by credit unions that are frequently unable to fill the gap as a result of current lending restrictions. These are the issues that the Small Business Lending Enhancement Act is intended to confront.
"Our focus must be on increasing the lending to small businesses, which are the lifeblood of our economy. They have not only been a casualty of the ongoing credit crisis, but have unduly felt its impact," Sen. Schumer said. "The situation facing these businesses right now is much worse than a matter of them simply being denied new loans. They are being strangled by having existing lines of credit pulled. A threat like this to small businesses could upend the livelihood of millions of workers and be catastrophic for the larger economy."
Some sources indicate that the bill still faces opposition from the Independent Community of Bankers of America, a trade association that specializes in small banks, who feel that the proposal does not fit the tax-exempt mission of credit unions. They argue that credit unions have not even come close to hitting the existing limits, so the new bill provides no promise of a brighter future.
Opinions will continue to differ, but the real question remains: How much impact will this bill have on small businesses? Yes, there are businesses in need of credit, but is the extent of the credit problem an issue that truly requires new legislation?
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