Michigan credit unions today urged Michigan’s Sens. Carl Levin and Debbie Stabenow and their colleagues in the U.S. Senate to take quick action in support of a proposal that will strengthen small businesses, jumpstart local economies and create local jobs.
The Credit Union Small Business Jobs Bill, S. 2231, increases an arbitrary cap on how much credit unions can lend to small businesses – a cap that is preventing many small businesses from gaining access to much-needed capital to grow, invest in their communities, and hire people. This bill is expected to come to a vote in the U.S. Senate within the next three weeks.
“Small businesses in Michigan and across America are the engines of employment and economic growth – and these small businesses need relief from a credit crunch that is holding them back,” said David Adams, CEO and President of the Michigan Credit Union League & Affiliates. “Michigan credit unions have consistently stepped up to support small businesses at a time when other lenders have stepped back. Credit unions can and want to do more to help get Michigan and America working and competing again, and that’s why it’s critical that the U.S. Senate pass the Credit Union Small Business Jobs Bill.”
In a recent survey, 90 percent of small businesses reported that availability of credit is a problem. In fact, 61 percent of these same small businesses said it’s harder to get loans today than it was a few years ago.
Under federal law, credit unions face an arbitrarily set cap of 12.25 percent of their assets for member business lending. The Credit Union Small Business Jobs Bill will increase that limit to 27.5 percent of a credit union’s total assets. If approved, the plan would inject $13 billion in new funds into the U.S. economy, and create as many as 140,000 new jobs, all at no cost to taxpayers, according to estimates by the Credit Union National Association.
The legislation is co-sponsored by Senators Levin and Stabenow, and a companion bill in the House is backed by nine of Michigan’s 15 U.S. Representatives. That list includes all three of Michigan’s Congressmen who sit on the House Financial Services Committee: Reps. Bill Huizenga, R-Zeeland, Thaddeus McCotter, R-Livonia, and Gary Peters, D-Bloomfield Twp. It is a bill that reaches across the aisle and has broad bipartisan support.
The only opposition to the bill has come from the banking lobby, namely members of the American Bankers Association, who, despite their own refusal to make these small business loans, have launched a baseless campaign against credit unions who are ready and willing to step up.
“One of the best ways to help small businesses get access to capital so they compete and create jobs is to unleash credit unions’ full potential to support small businesses. That requires removing an arbitrary, irrational and counter-productive limit on small business lending,” Adams said. “Credit unions want to play a greater role in strengthening the economy of Main Streets across Michigan and America. The Credit Union Small Business Jobs Bill is vital to making that happen.”
Michigan credit unions continue to provide solid support for small businesses, with small business lending up 14 percent compared to a year ago, according to MCUL fourth quarter 2011 results. Michigan has an estimated 180,000 small businesses, 158,000 of which employ fewer than 20 people, according to the Small Business Administration. Small businesses represent 98.3 percent of Michigan employers and are responsible for 51.6 percent of private sector jobs in the state, according to the SBA. In Michigan, 90 percent of businesses fail by their tenth year, largely because they lack guidance; 80 percent fail because they don’t have access to capital.
The data showing increased small business support from Michigan’s credit unions comes as bank lending remains sluggish, a trend dating back to the 2008 recession. Federal Deposit Insurance Corp. data showed that U.S. banks’ small business lending continued to decline in the fourth quarter of 2011 and that year-over-year bank small business loans outstanding declined by nearly 5 percent in 2011.
About the Michigan Credit Union League & Affiliates
Organized in 1934, the Michigan Credit Union League is a trade association representing credit unions statewide. Based in Lansing, the MCUL offers credit unions assistance in the areas of regulatory compliance, legislative advocacy, media advocacy and operational information. For more information, visit www.mcul.org and follow us on Facebook at www.facebook.com/MICreditUnions and on Twitter at www.twitter.com/MICreditUnions.