Syracuse, New York – At the Syracuse Fire Department Federal Credit Union, U.S. Kirsten Gillibrand today pushed bipartisan legislation to spur small business growth and create jobs by increasing access to loans from credit unions. Senator Gillibrand promoted the Small Business Lending Enhancement Act that would increase access to credit union loans. By law, credit unions are required to limit member business lending to 12.25 percent of the credit union’s total assets. Senator Gillibrand’s bill would raise that cap to 25 percent of total assets, and increase the minimum business loan subject to the cap from $50,000 to $250,000.
Senator Gillibrand is working to include this legislation in the upcoming small business jobs package that will be drafted by Congress. New York State has 461 credit unions, 15 of which are in Central New York. According to the Credit Union National Association, this legislation would help create more than 7,000 jobs in New York without government expenditures.
“If we’re going to create new jobs and rebuild our economy for the long term, small businesses need more access to credit,” Senator Gillibrand said. “This commonsense legislation would free up lending at not-for-profit credit unions in every corner of America to small businesses. This would give small businesses more of the capital they need to get off the ground, grow and get thousands of Americans back to work.”
In the past 15 years, small businesses generated nearly two-thirds of all new jobs created in the United States – yet during the economic crisis, small business owners have struggled to access credit they need to expand. As a result of the financial crisis, many banks have tightened their lending, but credit unions, which have dollars to lend, are still restricted from filling the gap.
According to the Credit Union National Association, the reforms in the Small Business Lending Enhancement Act would increase small business lending by $10 billion within the first year of their enactment, generating more than 100,000 new jobs nationwide. Syracuse Fire Department Federal Credit Union would be able to grant an additional $7 million in business loans under this legislation, raising its overall cap to $14 million.
The legislation would also encourage more credit unions to start lending to small businesses. Under the current law, many credit unions find it difficult to start member business lending programs because the cost of meeting high regulatory and staffing requirements is too expensive relative to the cap. Credit unions say that raising the amount they are able to lend would make it easier to recover costs, and therefore would increase the number of credit unions able to start small business loan programs.
The Small Business Lending Enhancement Act was sponsored by Senator Mark Udall and cosponsored by 10 additional Senators from both parties. Senator Gillibrand is pushing to include the legislation in a small business jobs bill the Senate is expected to work on next month. Similar legislation has been introduced in the House of Representatives by Paul Kanjorski (D-PA) with 99 cosponsors.