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A new report detailing how credit to small businesses has withered in the wake of bank consolidation illustrates the point credit unions have been making-there is a need for credit union business lending.

The U.S. Small Business Administration (SBA) on Feb. 12 released its report on “Impact of Bank Consolidation on Small Business Credit Availability.” The 43-page effort, prepared by the agency’s office of advocacy, asserts that bank consolidation can limit small business access to credit. It notes that small business overall debt levels remained steady, but that was because small businesses turned to non-bank financial institutions for their credit needs.

“This is further proof that the provision in the CU Regulatory Improvements Act that would raise the ceiling on credit union member business loans from 12.25% to 20% of assets would be good for small businesses,” said CUNA Chief Economist Bill Hampel.

SBA Chief Counsel for Advocacy Thomas M. Sullivan conceded that bank consolidation is a complex subject. However, he also stated: “Since small banks provide a substantial share of credit to small firms, bank consolidation and how it relates to small business should be a real concern for policymakers.”

Copyright Credit Union National Association, Inc. Feb 23, 2004
Provided by ProQuest Information and Learning Company. All rights Reserved

This Financial Services article was written by Credit Union Newswatch on 6/1/2005

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