Member Business Lending

Recent Activity

National Credit Union Administration Rulemakings

In January 2023 NAFCU wrote to the NCUA requesting that the NCUA Board move to change its regulations to lift the threshold for business loans that are defined as “Commercial Loans” to $250,000 from the current level of $50,000.

On August 10, 2018, the NCUA published a notice of proposed rulemaking regarding loans and lines of credit to members. Specifically, the NCUA sought comment on whether longer, more flexible maturity limits for certain loans are warranted. These loans include one-to-four family real estate loans, home improvement, mobile home, and second mortgage loans.

In March 2019, the NCUA finalized the loans to members rule as proposed, which went into effect on April 24, 2019. The rule does not make any substantive changes, but rather makes the regulation “friendlier” through clarifying and technical changes. The final rule (1) identifies in one section the various maturity limits currently applicable to federal credit union loans; (2) clarifies that the maturity for a ‘‘new loan’’ under generally accepted accounting principles (GAAP) is calculated from the new date of origination; and (3) more clearly expresses the limits in place for loans to a single borrower or group of associated borrowers. To learn more about the final rule, see NAFCU’s Final Regulation summary and analysis.

Legislative Developments

The Member Business Loan Expansion Act, H.R. 4868, was introduced by Reps. Vicente Gonzalez (D-TX) and Brian Fitzpatrick (R-PA). This legislation would lift the definition of the lower end of the amount of a loan that would count toward the MBL cap from $50,000 to $100,000. Additionally, the bill would allow the NCUA Board to set a loan maturity limit greater than 15 years and it would expand the definition of “community financial institution” under the Federal Home Loan Bank Act to include credit unions. Reps. Gonzalez and Fitzpatrick also introduced the House version of the Veterans Member Business Loan Act, H.R. 4867.

Senators Dan Sullivan (R-AK) and Mazie Hirono (D-HI) introduced the Veterans Member Business Loan Act, S. 539, which would exempt loans made to veteran-owned small businesses from the member business lending cap, on February 28, 2023. This legislation was previously introduced in the 117th Congress.

The Expanding Financial Access for Underserved Communities Act, which would allow all types of credit unions to add underserved areas to their fields of membership and exempt business loans in underserved areas from the MBL cap, was introduced in the House and Senate during the 117th Congress. The bill passed the House Financial Services Committee in May 2022 and was included in a larger package of financial services related measures, the Financial Services Racial Equity, Inclusion, and Economic Justice Act, that passed the House in June 2022. The Senate version of this legislation, S. 4879, did not advance.