Streamlined LICU Eligibility to Help Credit Access According NCUA

Posted by Marissa Anema Wednesday, August 08, 2012 11:41:00 AM


WASHINGTON – As promised last month in Chicago at the CUNA’s American Association of Credit Union League (AACUL) summer meeting, NCUA sent letters yesterday to nearly 1,000 credit unions indicating they are eligible for low-income designation (LICU). That designation brings benefits that include the ability to accept supplemental capital and an exemption from the small business lending cap under certain circumstances.

NCUA touted its initiative to streamline the process for federal credit unions to receive a LICU designation as a way to bring more small businesses across America greater access to needed capital from federal credit unions. The greater access to credit, Matz said in the letter, should translate into job creation.

CUNA President/CEO Bill Cheney said of NCUA’s announcement, "The NCUA board clearly understands the pressing need for expanded authority in credit union member business lending to help spur the economy, and to give credit unions more flexibility to match their growth with supplemental capital. We appreciate the effort.”

"The fact remains, however, there are thousands of credit unions that cannot win the LICU designation, for one reason or another. These credit unions can go no further in helping their members help their local economies—or to grow in order to match their members' needs—without changes in the law that limits credit union member business lending,” he continued.

"We will continue to vigorously pursue those changes with Congress on behalf of our members."

The NCUA projected this initiative could unlock between $250 million and half a billion dollars in new, near-term business lending if all qualified federal credit unions participate. The initiative could double the number of LICUs and increase their member business lending by nearly 75%.

To qualify as a LICU, a majority of a federal credit union's membership must meet low-income thresholds based on 2010 Census data. 

In addition to the exemption from the statutory MBL cap, other advantages derived from the LICU designation include eligibility for Community Development Revolving Loan Fund grants and low-interest loans, the ability to accept deposits from non-members, and authorization to obtain supplemental capital.

Twenty-three N.J. credit unions qualify for the LICU designation:


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