I recently read an article in Inc. magazine entitled “After the Squeeze.” It was a compelling review of what we in the credit union industry already know – big banks are still not willing to lend to small businesses. The article’s author, Burt Helm, provides several examples of how small business owners cannot get access to much needed capital despite having built relationships with their banks over several years (in some cases, decades.) Stories of banks cancelling small business’ credit lines are common. Businesses that show profits are being denied for loans because they operate in industries that the banks have deemed “speculative” or “risky.” And if you haven’t been in business for at least 5 years, well, forget about it.
Which takes us to MBL reform – something that our industry deserves and has needed for quite some time. CUNA is leading this charge with help from state leagues, associations, and individual credit unions throughout the country. Credit unions want to help small business owners get the cash they need to help their businesses grow. Strong commerce leads to a stronger economy – that’s simple monetary theory. For the past several years, I can’t tell you how any times I’ve heard something along the lines of “small businesses are the engines of economic growth.” If that is true, then why can’t credit unions help them in more meaningful (and economically stimulating) ways? And why won’t more of our elected officials get on board to help credit unions do it?
No one is suggesting that credit unions approve risky loans or become lax in their lending standards. If the MBL cap is lifted, credit unions will continue to be prudent and thorough in their loan decisioning – they will just have more flexibility and a greater ability to help more businesses grow.
While I was impressed with most aspects of Helm’s article, I was a bit disappointed that credit unions were not mentioned once. I am sure that there are reasons for this omission but perhaps the biggest one is that Helm already knows that credit unions are limited as to the number of business loans they can give.
There is a big push for MBL reform before the current Congress adjourns. Let’s hope that we can finally get it done!