Credit unions poised to loan

BOULDER — Some area credit unions are chomping at the bit to be allowed to lend more money to business clients.

Credit unions currently are limited to lending no more than 12.25 percent of their total assets to small businesses. That lending amount could increase to 27.5 percent of a credit union’s total assets if a bill passes that U.S. Sen. Mark Udall (D-Colorado) introduced earlier this month in the Senate.

Raising the lending cap also would create an estimated 100,000 new jobs across the United States, according to the Credit Union Association of Colorado in Denver.

In Boulder, Elevations Credit Union hired Jay Champion to lead business lending and services. The former chief executive officer at Texans Commercial Capital LLC said the credit union plans to hire two business loan officers in the next 12 months, but it would probably hire four if the cap were raised. Elevations has about $950 million in total assets.

“Raising the cap would allow us to make a more substantial impact on our community — to owner-occupied Main Street businesses, the types of businesses that everybody recognizes,” Champion said. “It definitely (would) help credit unions become bigger players. We do have money to loan.”

Credit unions were capped at the 12.25 percent commercial lending rate in 1998 in a political maneuver, said Tim Dore, a spokesman for the Credit Union Association of Colorado. Some banks are lobbying against the plan to raise lending limits, Dore said.

The Colorado Bankers Association, which represents most banks in Colorado, said the new legislation is an attempt by credit unions to “grab power.”

“We are opposed to that as we have been in the past,” said Don Childears, president of the Colorado Bankers Association.

But most credit unions have plenty of money to lend — they just don’t offer loans to small businesses because the 12.25 percent lending cap is so low, which makes it relatively unprofitable, Dore said. Customarily, a small business must be a credit union member to apply for a loan there.

“This just frees up some money,” Dore said.

That certainly is true at Boulder Valley Credit Union, with $224 million in assets, which does not do any business lending at the moment, said Rick Allen, president and chief executive officer. Mortgage refinancing has also dried up a bit as interest rates have gone up, leaving the financial institution searching for ways to lend more money. Several credit union members have asked him for more business lending services, and Allen said he wishes he could offer it to them.

Premier Members Federal Credit Union also would like to continue lending to small businesses, said Carlos Pacheco, president. The financial institution has $392 million in assets.

“Some of us (credit unions) are close to the cap, and we may have to stop helping small businesses,” Pacheco said. “We think credit unions in the not-for-profit model can provide a lot of benefit to small businesses in and around Boulder.”

Raising the cap would increase small-business lending by almost $200 million in Colorado in the first year, according to the Credit Union National Association, a separate trade group. It would increase small business lending across the United States by more than $10 billion the first year, according to estimates.

National bank lobbyists have spoken out against the raising the cap, said Jennifer Talhelm, a spokeswoman for Udall. Udall’s plan would be offered as part of the Small Business Innovation Research/Small Business Technology Transfer Reauthorization Act, which would help small businesses invest in technology research and create jobs, Udall’s office said in a press statement.

“My bill would free up capital — without costing taxpayers a dime — so that credit unions can loan to local small businesses that need to make payroll, buy inventory or expand their businesses,” Udall said in the statement.

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