WASHINGTON – As many as 1,000 additional credit unions are eligible for NCUA’s low-income designation and the exemptions it affords, including from the member business loan cap, under a White House initiative unveiled yesterday to try to alleviate conditions caused by the historic drought plaguing much of the country.
“With this initiative, we are cutting regulatory red tape and expanding access to capital for small businesses, which should translate into job creation,” said NCUA Chairman Debbie Matz, who briefed President Obama on the plan during a White House meeting yesterday. “Providing small businesses with the money needed to open their doors, create jobs or expand operations will help our economy. This action is particularly timely for the 27 states devastated by this summer’s historic drought.”
The president’s program, created by the White House Rural Council, also calls for $30 million in aid for drought-stricken areas and initiatives by other federal agencies, including the Small Business Administration, Department of Agriculture and the Department of Transportation.
NCUA, which has approved low-income status for almost 1,200 credit unions, is contacting additional credit unions to notify them that they, too, are eligible for the designation under the agency’s rules. Letters were sent yesterday to 1,000 credit unions, according to Matz. Credit unions receiving these letters may “opt-in” with a simple reply that agrees to the low-income designation.
The new initiative could make hundreds of the nation’s biggest credit unions, those serving military personnel or those in big cities, eligible for a variety of benefits, NCUA said. Low-income designation makes a credit union eligible for NCUA’s low-interest community development loans and small technical assistance grants, as well as exemptions from the nominal MBL cap, and allows credit unions to accept non-member deposits and offer alternative capital.
The initiative comes as bills proposing to lift the 12.25% (of assets) cap on MBLs are stalled in Congress and have little prospect of passing this year.
To qualify as a low-income credit union, a majority of a federal credit union’s membership must meet low-income thresholds based on 2010 Census data.