August 24, 2014

Small-biz lending rebounding slowly for banks

Aug. 19, 2014 – Small-business lending by banks isn't rebounding as quickly as other forms of business and consumer lending, according to FDIC data.

The Wall Street Journal reported on FDIC data from the end of the first quarter that showed "banks held $585 billion in loans to small businesses, up 1% from last September but still 18% less than the peak of $711 billion in 2008." Furthermore, the WSJ noted that in "nearly one-third of all U.S. counties, small-business lending remains below 2005 levels," according to estimates by PayNet Inc.

However, credit unions continue to grow their lending to small businesses. Since 2008, credit union member business loans have grown 60 percent. Also, a 2011 study by the Small Business Administration Office of Advocacy said credit unions stood by their member small businesses during the financial downturn as banks sharply decreased their lending to small businesses.

NAFCU has encouraged lawmakers to act on legislation including H.R. 688, the "Credit Union Small Business Jobs Creation Act," and S. 968, the "Small Business Lending Enhancement Act," which would allow credit unions to extend credit to small businesses and help drive the economy without using taxpayer money. NAFCU has also advocated for action on H.R. 4226, the "Credit Union Residential Loan Parity Act," which would exempt certain residential loans from credit unions' federal statutory cap on member business lending; and H.R. 5061, which would exclude veterans' loans from the MBL cap.