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NAFCU's Brad Thaler urged House Speaker Nancy Pelosi, D-Calif., and House Minority Leader Kevin McCarthy, R-Calif., to support legislation introduced by Rep. Brad Sherman, D-Calif., that would provide a three-year exemption from the credit union member business lending (MBL) cap for loans made to small businesses as they recover from coronavirus national emergency.

"As you are keenly aware, small businesses are struggling in the current economic environment. The critical Paycheck Protection Program (PPP) from the Small Business Administration (SBA) has been an important bridge for small businesses in immediate need," wrote Thaler, NAFCU's vice president of legislative affairs. "Credit unions are proud to participate in this program. However, most experts agree that the economic impact of COVID-19 and the need of credit for small businesses will be with us beyond the short-term bridge provided by the PPP. H.R. 6550 is an important step to addressing that longer-term need."

Sherman's legislation, the Access to Credit for Small Businesses Impacted by the COVID-19 Crisis Act, would exclude any MBLs that are extended within the three-year period beginning March 13, 2020, of which the proceeds are used to aid a small business in the recovery from coronavirus pandemic. It would require the NCUA to issue implementing regulations that ensure a credit union’s safety and soundness is not impacted by the loans.

"Just as enacting the PPP encouraged more institutions to offer needed SBA PPP loans, enacting H.R. 6550 will help encourage more credit unions to establish and enhance member business lending programs designed to help their small business members recover from the COVID-19 pandemic beyond the PPP," Thaler added. "Enacting H.R. 6550 will allow them to do so without fear of an arbitrary and outdated cap hindering their efforts."

In addition to Sherman's bill, 65 members of Congress recently called for the next coronavirus relief package to either remove or increase the MBL cap to ensure credit unions can lend to small businesses in need as a result of an advocacy push by NAFCU and credit unions.

NAFCU has long sought relief for credit unions from the arbitrary MBL cap and, amid the coronavirus pandemic, has urged Congress to amend the Federal Credit Union Act to provide credit unions with greater flexibility and relief from the MBL cap so they can increase access to lending to the nation's small businesses that are in need.

Stay tuned to NAFCU Today for updates on MBL relief efforts.