BigNews.Biz - May 02,2010 - Cheektowaga, New York – At the Cheektowaga Community Federal Credit Union, U.S. Senator Kirsten Gillibrand today pushed bipartisan legislation to spur small business growth and create jobs by increasing access to loans from credit unions. Senator Gillibrand promoted the Small Business Lending Enhancement Act that would increase access to credit union loans. By law, credit unions are required to limit member business lending to 12.25 percent of the credit union’s total assets. Senator Gillibrand’s bill would raise that cap to 25 percent of total assets, and increase the minimum business loan subject to the cap from $50,000 to $250,000.
Senator Gillibrand is working to include this legislation in the upcoming small business jobs package that will be drafted by Congress. New York State has 461 credit unions, roughly 100 of which are in Western New York. According to the Credit Union National Association, this legislation would help create more than 7,000 jobs in New York without government expenditures.
“If we’re going to create new jobs and rebuild our economy for the long term, small businesses need more access to credit,” Senator Gillibrand said. “This commonsense legislation would free up lending at not-for-profit credit unions in every corner of America to small businesses. This would give small businesses more of the capital they need to get off the ground, grow and get thousands of Americans back to work.”
"Credit Unions across the state and the nation sincerely appreciate Senator Gillibrand's leadership on the very important issue of Credit Union Business Lending,” said Michael S. Vadala, President and CEO of the Summit Federal Credit Union. Here in Upstate New York many of the large businesses that used to fuel our economy are gone, and it will be the success of small business that determines our future. Adding credit unions as a funding source is critically important to those businesses which are too small to be considered for loans from larger commercial banks."
In the past 15 years, small businesses generated nearly two-thirds of all new jobs created in the United States – yet during the economic crisis, small business owners have struggled to access credit they need to expand. As a result of the financial crisis, many banks have tightened their lending, but credit unions, which have dollars to lend, are still restricted from filling the gap.According to the Credit Union National Association, the reforms in the Small Business Lending Enhancement Act would increase small business lending by $10 billion within the first year of their enactment, generating more than 100,000 new jobs nationwide.
The legislation would also encourage more credit unions to start lending to small businesses. Under the current law, many credit unions find it difficult to start member business lending programs because the cost of meeting high regulatory and staffing requirements is too expensive relative to the cap. Credit unions say that raising the amount they are able to lend would make it easier to recover costs, and therefore would increase the number of credit unions able to start