As cooperatively owned, not-for-profit financial institutions, credit unions exist for the sole purpose of providing affordable financial services to their member-owners. In Iowa, our 137 credit unions have seen a growing demand for credit from members who own small businesses and farms. As banks and their regulators have tightened access to credit, Iowa credit unions have been responding to this need to the best of their ability.

Unfortunately, federal law imposes a cap on the amount that credit unions can loan to businesses to 12.25 percent of their assets. This limitation has forced credit unions to turn away small businesses that they could otherwise serve.

The good news for small businesses is that Congress may soon take action to raise that cap. Colorado Sen. Mark Udall recently filed an amendment to the Small Business Lending Fund Act (H.R. 5297) being considered in the U.S. Senate. Udall’s amendment would raise the business lending cap for credit unions to 27.5 percent, so long as the credit union can meet certain regulatory requirements.

This amendment, should it become law, would significantly benefit small businesses and our economy at a time when credit unions are able to provide more capital in the marketplace.

A number of Iowa credit unions have already reached, or are rapidly approaching, the 12.25 percent cap. Our conservative estimates indicate that, in Iowa, an additional $170 million to $190 million in new credit would be provided by credit unions to small businesses if the Udall amendment became law (and $10 billion nationally). Based on the Council of Economic Advisors’ estimates, this new lending activity would result in approximately 1,800 new jobs in Iowa within the first year – at no cost to the taxpayer.

Credit unions are ready to step up and help small businesses that need access to capital. Keep in mind that H.R. 5297 already includes $30 billion in taxpayer money to assist banks with their lending to small businesses. The Udall amendment simply increases an arbitrary cap on credit union business lending and will spur economic growth at no cost to the federal government.

Congress should adopt the Udall amendment as a common-sense solution that will help small businesses, create jobs and allow credit unions to continue doing what they do every day: serve the financial needs of their members. r

Patrick Jury is president and CEO of the Iowa Credit Union League.