Credit unions have approached the White House to demand an increase in the amount that they can lend out to businesses, in-order, to step up job creation. The National Association of Federal Credit Unions (NAFCU) has sent a letter on Monday asking President Obama to increase the lending cap as part of the job creation package.
The NAFCU has called for a cap increase as it is common and effective way to ensure that credit worthy small businesses have the required capital to spur job creation. This is not new as NAFCU had been demanding for the increase since January 2010 so as to help small businesses find the required capital from other lenders.
The member has disclosed that some credit unions are approaching but others have not as yet fully realized their business lending programs because of the 12.25 percent cap of total assets on business lending. In its letter to Obama, NAFCU intimated the President of the role of small businesses to employ half of America’s private sector employees, SME’s contribution to pay 45 percent of total U.S. private payroll and to generate 60 to 80 percent of new jobs.
NAFCU strongly believes that a sound economy and large labor force are determined by the health and well being of small business community. The bipartisan legislation has been introduced by Sen. Mark Udall (D-Colo.) that would lift an arbitrary member’s business lending cap from 12.25 percent to 27.5 percent.
Credit Unions may have to fulfill certain criteria so as to make them eligible to increase lending. The criteria can be like five years of lending experience, fulfilling at-least 80 percent of the current 12.25 percent cap, being well capitalized and capable of demonstrating good underwriting capability.
This article was submitted by Raj Tulshan, Director of Business Development of Biz2Credit. Biz2Credit is a small business marketplace that connects entrepreneurs with financing options and advice to grow their business. Send all questions to firstname.lastname@example.org