In a letter sent to President Obama today, Reps. Ed Royce (R-CA) and Carolyn McCarthy (D-NY) encourage the President to include the Small Business Lending Enhancement Act (H.R. 1418) in his soon to be released jobs package. The legislation, introduced earlier this year by Royce and McCarthy, provides much needed financing for small businesses without spending a single tax dollar.  

"At no cost to the taxpayer, raising the member business lending cap will provide America’s small businesses with the capital they need to stay afloat, remain competitive, and ramp-up hiring," said Royce. "This legislation takes an important step in shifting our current economic path and putting Americans back to work."  

The Small Business Lending Enhancement Act (H.R. 1418) raises the member business lending cap for credit unions from 12.25% to 27.5%. If enacted, the legislation would allow credit unions to lend an additional $13 billion to small businesses, which could create 140,000 new jobs.  

"With this year’s budget deficit expected to reach $1.3 trillion, now is the time to think outside the box when it comes to spurring job creation. We believe this bipartisan, bicameral proposal should be a part of any comprehensive strategy to promote economic growth," the letter concludes.  

Note: A PDF of the final letter can be found here. Full text of the letter can be found below:

September 7, 2011

President Barack Obama
The White House
1600 Pennsylvania Avenue NW
Washington, DC 20500

Dear Mr. President:

As you prepare to release a proposal intended to spur economic growth and job creation, we encourage you to include an increase in the member business lending (MBL) cap on our nation’s credit unions. During this difficult period in our economy, many small businesses require capital to stay afloat, remain competitive, and ramp-up hiring. By increasing the credit union cap we can help fill this void and stimulate job creation without spending additional tax dollars.

Currently credit unions are restricted from lending beyond 12.25% of their assets to member businesses. As a result, they are prevented from extending loans to many of the small businesses looking for affordable, reliable access to credit. According to economists, by increasing the MBL cap to 27.5% credit unions would be able to lend an additional $13 billion to small businesses, which could create 140,000 new jobs within a year.

We have introduced this proposal in the House and Senators Mark Udall (CO) and Olympia Snowe (ME) have introduced companion legislation in the Senate. In total, 85 members of Congress have signed onto these bills. The Small Business Lending Enhancement Act (H.R. 1418/S. 509) would lift the current cap from 12.25% to 27.5% for those credit unions that meet the following requirements: be well capitalized, have a history of MBL experience, be operating near the lower cap for at least one year, and receive approval by their regulator, the National Credit Union Administration (NCUA).

With this year’s budget deficit expected to reach $1.3 trillion, now is the time to think outside the box when it comes to spurring job creation. We believe this bipartisan, bicameral proposal should be a part of any comprehensive strategy to promote economic growth. Again, we urge you to include it in your proposal intended to spur job creation.

Sincerely,

Representative Ed Royce (CA-40)
Representative Carolyn McCarthy (NY-04)

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