June 28, 2012 – Noting the high rate of banks’ rejection of small-business loan requests, Rohit Arora of Biz2Credit.com on Wednesday called anew for elimination of the restrictions on credit unions’ lending to small businesses.
Arora’s firm, a NAFCU Services preferred partner, publishes a Small Business Lending Index each month. The index shows credit union lending to small businesses up 6.4 percent from May 2011 to May 2012.
“At a time when big banks typically reject nine out of 10 funding request from small business owners, credit unions have filled the void,” he says. “In the past 12 months, they have steadily upped their loan approval percentages and have become an increasingly important source for capital.”
More credit union lending to small businesses would strengthen the economic recovery, he said. “Everybody wins.”
Arora, supporting the case made by NAFCU At-Large Director Bob Marquette in a June 21 hearing, urged action on H.R. 4191, which would pave the way for more credit union lending through the Small Business Administration; and H.R. 1418, which – like S. 2231 – would raise the credit union member business lending cap from 12.25 percent of assets to 27.5 percent. Senate Majority Leader Harry Reid, D-Nev., has put S. 2231 on the Senate calendar; the bill could be taken up for action at any time.
NAFCU is continuing to seek passage of these bills, and it’s urging credit unions to share their small-business lending success stories in discussions with lawmakers.
ORNL FCU in Oak Ridge, Tenn., shared one of its small-business lending stories recently: It funded the start-up of Greater Growth LLC, a new aquaponics business in Lenoir city, Tenn., that involves growing plants in nutrient-supplemented water, where Tilapia fish are raised. The business owners are Joel and Linda Townsend.
The Townsends said one the biggest obstacles to their new business was getting the financial backing. They needed $1.5 million. ORNL FCU helped them get that financing through SBA.
ORNL FCU was ranked eighth among Tennessee financial institutions providing small-business loans. It ranked first in East Tennessee; no other bank or credit union in the region made the top 10, the credit union notes.
To contact lawmakers on H.R. 4191 and S. 2231/H.R. 1418, dial the U.S. Capitol switchboard at 202-224-3121; or use our online tools.