The Business Record’s Oct. 14 editorial “Credit union cap should be raised” presented one side of the story about credit unions’ desire to increase their commercial lending authority. Before you decide on the issue, you may also want to consider a few facts.

Seventy years ago, Congress provided credit unions with an exemption from paying state and federal income taxes with the hope they would make consumer loans to people of low and moderate means. Now a few large credit unions want to leverage that tax exemption to make large commercial loans. As credit unions continue to expand, so does the impact of that exemption on taxpayers.

Keep in mind that there is arguably no cap in place for credit unions to make small business loans. They have unlimited authority to make commercial loans under $50,000, commercial loans secured by a one- to four-family dwelling, commercial loan participations or any commercial loan guaranteed by the Small Business Administration (SBA).

Despite this unlimited small business lending authority, only three credit unions in Iowa are even close to their current lending authority, and last year, Iowa credit unions made only 14 SBA loans, compared with 577 made by banks.

A better option for the few credit unions that want to become commercial lenders is to transition to a mutual savings bank. This charter already exists under the law and would allow credit unions to maintain their mutual ownership structure and expand their commercial lending authority, but also requires proper taxation and regulation for these activities.

The real problem – and one the credit union proposal does not address – is weak loan demand caused by an uncertain economic environment. Businesses of all sizes are still reluctant to grow and expand their businesses in today’s economy.

According to a recent study by the National Federation of Independent Business, more than 90 percent of business owners reported that their credit needs are being met. Poor sales, overregulation and taxes were their top concerns.

Rather than increasing an already significant tax subsidy for a few credit unions to provide larger commercial loans, leaders in Iowa’s banking industry propose focusing on policies that will help small businesses expand and create jobs.

John Sorensen is the president and CEO of the Iowa Bankers Association.