DCUC Advocates for Lifting Loan Cap on Veteran-Owned Small Businesses in Senate Small Business Committee Letter
Today, the Defense Credit Union Council (DCUC) sent a letter to the Senate Small Business and Entrepreneurship Committee urging members to take action to better support veteran-owned small businesses in rural America. The letter was sent ahead of the committee's September 18, 2024, hearing titled, "Streamlining and Coordinating Support for Rural Small Businesses.”
“For credit unions, especially Defense Credit Unions, helping our nation’s service members and veterans create opportunities for themselves and their families is a top priority,” stated Jason Stverak, DCUC Chief Advocacy Officer. “However, the arbitrary cap on business loans to members—currently set by Congress—restricts the assistance we can offer to veteran entrepreneurs.”
DCUC’s letter highlighted bipartisan legislation, spearheaded by Senator Mazie Hirono (D-HI) and Senator Dan Sullivan (R-AK), that would amend the Federal Credit Union Act (FCUA) to exclude extensions of credit to veterans and military members from the definition of a “member business loan.” This change would provide a crucial exemption, allowing credit unions to extend more credit to veteran-owned businesses without facing loan limitations imposed by the current statutory cap.
DCUC's letter also addressed the need for expanded access to capital for veterans. DCUC referenced a 2018 report titled “Financing Their Future: Veteran Entrepreneurs and Capital Access,” published by the U.S. Small Business Administration (SBA) and the Federal Reserve Bank of New York. The report found that veteran business owners applied for more funding and submitted more loan applications per business than non-veterans. However, they were denied loans at a disproportionately higher rate.
There is a real need for small-dollar business loans in the veteran space,” wrote Stverak. “Credit unions are interested and willing to serve their veteran members’ needs yet are currently hampered by the current rules in place that cap their business loans to a small percentage of their total assets. Exempting veteran business loans from this cap would give veterans a better chance at securing the funding they need to grow and improve their businesses.
The current loan cap was enacted through the Credit Union Membership Access Act of 1998. The DCUC argues that lifting this cap—particularly for veterans—would provide new economic opportunities for service members and their families, particularly in underserved rural communities.
“We urge the Senate Small Business and Entrepreneurship Committee to support this legislative effort and remove the obstacles preventing veteran entrepreneurs from achieving their business goals,” stated Anthony Hernandez, DCUC President/CEO. “Together, we can strengthen rural economies and provide better financial pathways for those who have served our country.”