AIB applauds the National Credit Union Administration’s recent overhaul of its member business lending (MBL) rule, which will make it easier for small businesses to access the credit that they need.
AIB submitted comments in support of the rule change. The limited availability of credit is a major concern for independent businesses, and AIB’s 2016 Independent Business Survey found that in the last two years, one in three locally owned businesses couldn’t get the capital that they needed to grow.
Most significantly, the new MBL rule eliminates a restriction that had required credit unions to obtain standardized personal guarantees on all business loans. Instead, more like banks, credit unions will be allowed to develop their own business lending underwriting policies, which will be reviewed yearly by their regulator.
“We support an expanded role for local credit unions in small business lending,” AIB wrote in its comments. “We believe NCUA’s proposed changes to its MBL rule will give credit unions more flexibility to meet the credit needs of local businesses and thereby increase overall lending to small businesses. In particular, we strongly support NCUA’s move away from prescriptive rules, including specific mandates on collateral and personal guarantees. Small, local businesses are inherently singular enterprises and lenders need flexibility in making loan decisions appropriate to the circumstances of each prospective business borrower—so long as those decisions follow a sound underwriting policy overseen by regulators.”
For more on NCUA’s rule change and the small business credit crunch, see AIB’s comments.