[Congressional Record Volume 158, Number 42 (Wednesday, March 14, 2012)]
[Senate]
[Pages S1673-S1674]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
SMALL BUSINESS LENDING ENHANCEMENT ACT
Mr. UDALL of Colorado. Madam President, I have come to the floor to
speak about an opportunity to expand capital for small businesses by
lifting the arbitrary limit on the credit unions ability to serve small
businesses. I have done this on a number of occasions over the last
couple of years so the President knows that this is a cause that is
important to me. It is important to me because there is a phenomenon in
our country where small businesses are starving for credit. Yet the
Federal Government is still standing in their way.
I am talking about the smallest of small local businesses. These are
the men and women who need $50,000, $100,000 or maybe $200,000 to move
from their garage to a retail storefront, to renovate their sales floor
or upgrade their equipment and expand. They are often too small to be
worth a bank's time or they don't fit the lending guidelines of the
bank's corporate headquarters. But these small business owners know
credit unions in their community have money to lend and these credit
unions truly want to help. They probably see each other at Little
League games, church, play cards together--they socialize. Instead of
being able to offer the bridge loans that the small local businesses
need, the credit unions end up saying: Sorry, we want to help you but
the Federal Government has set a limit on how many businesses we can
loan funds to.
Now we are moving to the Jumpstart Our Business Startups Act, or the
[[Page S1674]]
JOBS Act, that the House passed last week. That bill is aimed at
increasing the availability of credit to startup companies by
expediting and easing the process of undergoing an IPO, or an initial
public offering. I think that is a noble goal, especially as our
economy still struggles to create jobs. But the problem is we are still
leaving the little guys behind--the people in each and every one of our
neighborhoods who want to expand their businesses and hire people as
soon as possible.
Unfortunately, the JOBS Act is aimed at companies with revenue under
$1 billion. Let me repeat that--billion with a B. These companies may
well need help with IPOs, but I am talking about offering relief to
traditional Main Street businesses.
I am still committed to allowing credit unions to increase the amount
of money they can lend to small businesses. So I will, once again,
introduce the bipartisan Small Business Lending Enhancement Act as an
amendment which would open additional credit to small businesses
without costing taxpayers a dime.
I know the Presiding Officer has many small, wonderful towns in her
State where she sees many small businesses. I wish to talk about a
couple small businesses in my State. Stacy Hamon is a Coloradan who
owns the 1st Street Salon in Thornton. She was turned away by a bank
because her loan was too small to be worth the risk. She went to her
credit union. They wanted to help her. They helped her. She opened a
larger business and she has created jobs in the process.
I am also talking about people such as Lisa Herman of Broomfield, CO.
She is the co-owner of Happy Cakes Bakeshop in Denver's Highland
Square, and she needed a loan to expand and cater more weddings. She
was turned away by her bank. She went to her local credit union and
that credit union was able to provide her with the loan she needed to
continue to grow her successful business and hire more Coloradans.
Stacy and Lisa don't need a $1 billion IPO, they need a small bridge
loan. We could be making an enormous difference in these local
communities with mere pennies on the dollar, which is what the JOBS Act
is focused on. Yet my amendment would be the only single piece of the
JOBS Act that would actually help small businesses or directly create
jobs.
Put simply, credit unions specialize in these small loans to small
business. In fact, the average credit union small business loan is just
$219,000. In contrast, the Federal Reserve has told us many banks have
quit considering loans under $200,000 because they are not worth their
time.
Credit unions know these small business owners and they have money to
lend to them. Unfortunately, Federal law still limits the amount of
small business loans a credit union can extend to 12 percent of their
assets. Nearly 350 credit unions are facing this cap and over 500 are
having to slow down or stop their business lending altogether. That is
hard to believe; it seems such a missed opportunity. In effect, we in
government are telling these financial institutions they cannot help
create jobs in their local communities. That is why my amendment would
double the amount of money credit unions can offer small businesses.
Let me turn to my friends in the banking sector. We have heard from
banks over the years, and they say they think it is unfair that they
have to compete with the credit unions. The fact is this isn't about
banks or credit unions; it is about small business. These financial
institutions, quite frankly, serve very different small business
populations. Credit unions serve the smallest of small businesses that
often must resort to relying on credit cards with comparatively high
interest rates in order to invest in equipment to grow their
businesses.
These are business owners who have been turned away or ignored by
large banks. We are talking about new loans to new and growing small
businesses. After over 100 years of lending to small businesses, credit
unions only represent 5 to 6 percent of all small business loans. Even
if increasing the limit on credit union lending were to double their
market share, banks would still have 90 percent of the market to
themselves.
I have also heard the banks say this proposal is unproven or somehow
an unsound way of increasing small business loans. But the truth is
credit unions have been making small business loans since their
inception in the early 1900s. That is, by my math, over 100 years. It
wasn't until 1998 that there were any limits whatsoever on how much
they could lend.
The credit unions' own regulator, the National Credit Union
Administration, has endorsed lifting or even eliminating the small
business lending cap. The NCUA chairman testified before Congress that
``increased business lending is good not only for the credit union, but
also for its members and the communities in which the credit union
operates.''
I have to say I am frustrated. Why can we not agree on uninhibited
small business support growth and job creation? Let's not let the
squabbles between banks and credit unions keep these jobs from out-of-
work Americans.
I will conclude by acknowledging that we passed earlier today a
bipartisan transportation bill and, in so doing, we voted on amendments
dealing with everything under the Sun, from contraception to
privatizing rest stops. So I sure hope we can have an open amendment
process during consideration of the JOBS Act and include this important
amendment, this important legislation, which would help small business.
After all, if we are going to tell the American people this bill is
about increasing access to capital--we have heard that said over and
over, that this is about access to capital--we sure better be willing
to start with those small business owners on Main Street. Colorado
common sense and New Hampshire common sense could prevail. We ought to
at least have a chance to consider this important issue and to debate
this idea on the floor of the Senate and, I hope, include it in the
JOBS Act. Because access to capital is what is needed right now and the
credit union sector is willing and able to do so.
Madam President, thank you for your attention. I yield the floor and
I note the absence of a quorum.
The PRESIDING OFFICER. The clerk will call the roll.
The bill clerk proceeded to call the roll.
Mr. BENNET. Madam President, I ask unanimous consent that the order
for the quorum call be rescinded.
The PRESIDING OFFICER. Without objection, it is so ordered.
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