Member Business Lending – What to Know Now and What Can Wait



Chances are your credit union is still getting used to NCUA’s new member business loan rule. To help you get up to speed, “Credit Union BUSINESS’s” compliance expert offers a few tips. Keep these nuggets of information in mind as your CU gradually comes to terms with the new regulation’s MBL impacts.

More than 12 years have passed since the last significant change to the National Credit Union Administration’s member business loan (MBL) regulation. Most in the movement view the new rule as a positive change. Whether you support or oppose it, there is no denying the impact it will have on a credit union’s MBL program.

While the industry is digesting the full impact of the rule, here are a few things to keep in mind.

What to Know Now

Only one piece of the rule is effective 60 days after publication in the “Federal Register”(May 13, 2016).Every other change in the final rulewill become effective January 1, 2017. That said, the change with an earlier effective date is an important one.

Currently, NCUA generally requires a credit union to obtain a personal guarantee from the principal or principals of the borrowing organization unless the CU obtains a waiver. Under the amended rule, a credit union will not be required to obtain a personal guarantee or waiver. However, any credit union choosing to forgo the personal guarantee must document strong mitigating factors it believes will offset its risk. A word of warning: take advantage of this leniency with caution.

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