William & Mary Business Law Review


Thomas Zells


2015 William & Mary Business Law Review Best Student Note Award


While the economy has gradually begun to improve following the 2008 Financial Crisis, “Main Street” has not played a large role in the recovery. This is atypical of most recoveries, and particularly disturbing because of the disproportionate number of jobs traditionally created by small businesses. Credit unions, but for the current statutorily imposed cap on their business lending authority, could substantially aid Main Street’s recovery. The cap currently restricts a credit union’s member business lending to 12.25 percent of its total assets and chills their ability to engage in business lending or to even invest in developing business lending programs at all.

This Note argues that raising this cap, as is suggested in proposed legislation such as the Credit Union Small Business Jobs Creation Act (H.R. 688), would significantly assist Main Street’s recovery by providing substantial new credit to small businesses, thus promoting the creation of new small businesses and jobs. This Note begins by providing a brief history of credit union member business lending and showing that not only is there no statutory reason for the current cap, but also that the proposed policy justifications at the time of its implementation were greatly overstated. It then explains how the current economic and regulatory environment, along with modern policy considerations, strongly support raising the cap. Finally, this Note shows how currently proposed legislation and agency support would largely alleviate concerns about the safety and soundness of individual credit unions, the credit union system, and the National Credit Union Share Insurance Fund as they relate to increased member business lending authority.