WASHINGTON — The names of small businesses seeking loans are scrawled across a whiteboard in the Bethesda, Md., offices of Mid-Atlantic Financial Partners: a Denny’s franchisee with plans for a new restaurant; the owner of a limousine fleet hoping to consolidate his auto loans; a government contractor seeking a line of credit to fund expansion; the owners of a medical office building in Leesburg, Va., looking for a mortgage.
Most of the businesses came to Mid-Atlantic after their requests for financing were rejected by one or more banks. Mid-Atlantic is not a bank: It is mostly owned and funded by a local credit union, Mid-Atlantic Federal Credit Union.
And at a time when banks are making fewer business loans, Mid-Atlantic is expanding dramatically, lending $32 million to small businesses last year and planning to lend $50 million this year.
“Credit unions by their nature are designed to serve the underserved,” said Frank Amantia, president of Mid-Atlantic Financial. Banks, he said, “have not stepped up to the plate and filled that need” of local businesses seeking loans.
Credit unions, historically focused on consumer lending, increasingly are making loans to businesses too. But the industry’s potential role in fueling an economic recovery, and its opportunity to seize market share from struggling banks, are limited by federal curbs on the share of a credit union’s resources that can be devoted to business lending.
The industry now is mounting a vigorous campaign to lift the cap.
Sympathetic legislators have introduced bills in the House and Senate that would more than double the business-lending capacity of credit unions. But banks vigorously oppose the idea, arguing that credit unions should remain focused on their traditional mission of making loans to consumers.
Credit unions say raising the cap would instantly increase loan availability at no direct cost to taxpayers.
