ALBANY - The Federal Reserve Bank of New York released the results of a new poll yesterday that showed New York's small businesses are still having trouble borrowing, suggesting banks have not loosened their lending standards since the economic crisis began four years ago.
The poll also indicated that business microloans, loans under $100,000, are highest in demand and toughest to secure. And, of those that did receive funding, the majority did not get the full amount they applied for.
Credit unions have demonstrated they can do business lending safely and have continued to lend while other financial institutions pulled back.
"Small businesses are the engine of growth for our economy here in New York and across the country," president and CEO of the Credit Union Association of New York William J. Mellin said. "Statistics show that credit unions have stepped up during the recent financial crisis to help fill a void in the availability of business credit. They could do even more if Congress would pass proposed legislation raising the member business lending cap from 12.25 percent to 27.5 percent."
According to the Credit Union National Association, New York credit unions could infuse nearly $1 billion in tax-free capital to small businesses - $13 billion nationwide - creating approximately 10,000 jobs - 140,000 nationally - if Congress enacts H.R. 1418, the Small Business Lending Enhancement Act. The Obama administration has endorsed this legislation.
N.Y. Rep. Carolyn McCarthy (D-4) is an original sponsor of the House legislation. Reps. Gary Ackerman (D-5), Timothy Bishop (D-1), Richard Hanna (R-24), Brian Higgins (D-27), Maurice Hinchey (D-27), Gregory Meeks (D-6), Charles Rangel (D-15), Tom Reed (R-29), Paul Tonko (D-21) Edolphus Towns (D-10) and Robert Turner (R-9) have also signed on as co-sponsors.
N.Y. Sens. Charles Schumer (D) and Kirsten Gillibrand (D) signed on as leading co-sponsors of the corresponding Senate legislation.
"The only thing standing in the way of the bill's passage is opposition from the banks, which have reduced their lending," Mellin said. "This should not be a credit unions vs. banks issue. The only considerations should be whether the Small Business Enhancement Act can help address the current jobs deficit and whether it will be beneficial to our economy. The answer to both is yes!"
Credit unions have been making member business loans since their inception in the early 1900s. They go hand in hand with credit unions' mission to promote thrift among and credit to their members. In the first 90 years of their existence, there was no cap. The current cap was an arbitrary limit imposed by Congress in the Credit Union Membership Access Act of 1998.
The Credit Union Association of New York has served as the trade association for the state's credit unions for 95 years. New York credit unions have assets of more than $57 billion and serve 4.6 million members. To learn more about the Association, visit www.cuany.org.