Credit unions driving growth in small business lending: Empowering veterans and revitalizing communities
Credit unions are uniquely positioned to bolster local economies through small business lending, and recent legislative initiatives promise to enhance their ability to support these vital community pillars.
By expanding lending portfolios—particularly to veteran entrepreneurs—credit unions not only empower individual business owners but also help revitalize neighborhoods.
Veteran success: A testament to credit union support
Will Rivera is a U.S. military veteran who transitioned from a 25-year career in the service to entrepreneurship. A retired first sergeant, Rivera channeled the leadership and discipline honed during his military career into launching Running Soles—a local shoe store financed with the help of Abound Credit Union in Radcliff, Kentucky.
Reflecting on the experience, Rivera noted, “Abound was there from the beginning for us. They saw our vision and believed in our concept.” His journey underscores the tangible impact that responsive credit union lending can have on veteran-owned businesses and community development.
Legislative initiatives: Modernizing lending caps and supporting veterans
For credit union professionals, understanding the regulatory framework is key to optimizing business lending. NCUA’s Part 723 sets forth guidelines for managing the risks associated with member business lending, including a cap that traditionally limits credit unions to lending no more than 12.25% of their assets to small businesses.
This structure, while designed to ensure financial stability, has also imposed constraints that many credit unions find increasingly restrictive in today’s dynamic economic climate. Recognizing the challenges posed by outdated regulations, industry advocates are working to update the framework that governs credit union lending. A key focus is the threshold used to define a member business loan (MBL).
Currently, loans under $50,000 count toward the MBL cap—a figure that has lost value over time. The bipartisan Member Business Loan Act proposes raising this threshold to $100,000, thereby enabling credit unions to extend more vital lines of credit to Main Street small businesses.
The current $50,000 threshold for member business loans—established nearly 27 years ago—now effectively equates to over $92,000 in today’s dollars when adjusted for inflation. That's what Michael Sims, chief commercial banking officer at Georgia’s Own Credit Union and a spokesperson for America’s Credit Unions, explained during a February 12, 2025, House Small Business Committee hearing titled “Driving Economic Growth: SBA Lending Programs and the Vital Role of Community Banks.”
The outdated $50,000 benchmark, Sims argued, places an artificial constraint on credit unions, limiting their ability to support small businesses in an era of heightened financial need. He called for legislative reforms, such as those proposed in H.R. 4868, to update these figures and ensure that credit unions can fully leverage their capacity to drive local economic growth.
In tandem, America’s Credit Unions supports H.R. 507, the Veterans Member Business Loan Act, which would exempt loans to veteran-owned small businesses from the MBL cap. This legislation is designed to remove barriers that restrict the capital available to veterans—helping them leverage their military-honed skills to build successful civilian enterprises.
The broader impact and a call to action
These legislative efforts not only open up new opportunities for credit unions to diversify and expand their lending portfolios, but they also underscore a commitment to community service.
Sims further emphasized to the House Small Business Committee that credit unions embody a “people helping people” philosophy, a cornerstone of their community-centric approach. He noted that unlike larger banks, which often prioritize profits over personal connections, credit unions focus on tailoring their services to meet the unique needs of each member. This commitment to personalized, member-first service not only enables credit unions to deliver customized financial solutions but also reinforces their role in strengthening local communities.
Sims also testified that credit unions often encounter cumbersome administrative hurdles and delayed responses when working through current SBA loan processes, which slow the delivery of crucial capital to small businesses. These operational inefficiencies force lenders to navigate a labyrinth of paperwork and extended waiting periods, diminishing their ability to respond promptly to community needs.
Streamlining these processes through regulatory reforms would enable credit unions to deploy funds more rapidly, ultimately enhancing their capacity to fuel local economic development and bolster community revitalization, according to Sims.
By working to ease regulatory restrictions, credit unions can more effectively channel resources to those who serve our country and drive economic growth at the local level.
In today’s competitive financial landscape, supporting legislation that modernizes credit union lending caps is not just a regulatory issue—it’s an investment in the future of community development and veteran entrepreneurship.
Learn more about the MBL issue and how you can get involved.