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Group estimates higher limit would free up $13 billion for small business

[caption id="attachment_35660" align="alignright" width="295" caption="Anne Benjamin, Jeremy Empol, Todd Sheffield"][/caption]

SANTA ROSA – A bill is being considered in Congress to allow credit unions to lend more to small businesses.

A cap currently exists of 12.25 percent of total assets that a credit union is allowed to be used for business loans to members. The Senate and the House have identical bills that would raise the cap to 27.5 percent.

Redwood Credit Union in Santa Rosa serves 200,000 members and has nearly $2 billion in assets.

“We are about three fourths of the way to the cap and will reach it within the next year or two,” said Anne Benjamin, chief operating officer at the credit union.

“In 2008, we started making SBA loans. Part of the reason was to leverage the capital we could lend as the government guaranteed portion of the loan does not count toward the cap.”

The two bills, S.B. 509 and H.R. 1418, have bipartisan co-sponsorship. The Senate version is sponsored by Sen. Mark Udall, D-Colo., and co-sponsored by 19 others, including Barbara Boxer and Sen. Harry Reid, D-Nev. The House bill is sponsored by California Republican Rep. Ed Royce and co-sponsored by 38 members of the house.

“If they increase it everybody wins,” said Ms. Benjamin. “Local businesses can get the money they need to grow and thrive.”

There have been various bills to increase the limits over the past several years. This time, the Treasury department got involved with the National Credit Union Association to establish the 27.5 percent cap with guidelines. The Treasury has asked for regulatory oversight to ensure credit unions do not increase their member business loans too quickly.

Jeremy Empol, director of federal government affairs for the California Credit Union League, said the league estimates that if this legislation passes, $13 billion in new assets will be available for lending in the first year, which will create 140,000 jobs

“We are fully supportive with this intent,” he said.

Mr. Empol noted that at the end of last year’s congressional session, Congress approved the Small Business Jobs and Credit Act setting aside $30 billion for banks to leverage $300 billion in lending to small businesses. The money available is for banks between $1 billion and $10 billion in assets.

However, said Mr. Empol, “The senate wasn’t able to attach the bill raising the cap for credit unions.”

Community First Credit Union is a little over $120 million in assets and has 12,000 members

“We are at 11.5 percent,” said Todd Sheffield, the CEO of Community First. “We are basically there. … We are capped out on the commercial side. This money is there already, we are not asking for any government money.”

Nationally, about 2,200 credit unions offer business loans.

“We really feel that if we can get this bill to pass that it will provide a lot of new jobs and it will really help in the local community because there are so many small businesses,” said Ms. Benjamin. “It will help up here and that is why we are focused on the passing of this bill.”