By Peter Marcus, DENVER DAILY NEWS
Stacy Hamon was forced to take out a second mortgage on her home when she wanted to open her salon about five years ago.
While the Thornton small business owner would have much rather a traditional business loan from a bank like Wells Fargo, she was forced to turn to her credit union to secure a loan only through a second mortgage on her home.
Hamon’s situation is not unique. Small business owners have struggled to access credit they need to expand or start a business because banks have tightened lending and because of a lack of access to loans from credit unions.
U.S. Sen. Mark Udall, D-Colo., is out to change that by introducing legislation that would double the amount of lending that credit unions can make to member businesses and increase the size of loans exempt from that limit.
Credit unions are currently required to limit member business lending to 12.25 percent of the credit union’s total assets. Udall’s bill would raise that cap to 25 percent of total assets, and increase the minimum business loan subject to the cap from $50,000 to $250,000.
“Small businesses are the engine of our nation’s economy — but small business owners from across Colorado are telling me that they are still struggling to access the lines of credit they rely on,” Udall said in a statement. “If we’re going to rebuild our economy, we have to unlock the credit market so businesses on Main Street can make payroll, buy inventory and expand.”
The Small Business Lending Enhancement Act of 2009 has bipartisan support. It was introduced Tuesday by a group of seven senators.
With small businesses generating nearly two-thirds of all new jobs in the United States over the past 15 years, the bill’s supporters point to the urgency of the legislation. It is estimated to increase small business lending by $10 million within the first year, producing more than 100,000 new jobs, according to the Credit Union National Association.
The legislation also has the support of the National Credit Union Administration.
Meanwhile, Hamon is hopeful Udall’s legislation will be backed by lawmakers so that she can secure the loans she needs to expand her 1st Street Salon in Thornton, 12500 1st Street.
“Small businesses are out there and I’m just praying that this does pass because I think everybody needs that chance,” she said.
Distributed by Colorado Capitol Reporters