DCUC Highlights Regulatory Reforms Needed to Improve Support for Small Business Lending

WASHINGTON, D.C. – On Monday, the Defense Credit Union Council (DCUC) sent a letter to the House Small Business Committee on Oversight, Investigations, and Regulations, urging critical reforms that would allow credit unions to better serve America’s small businesses.
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"Outdated statutory caps and bureaucratic barriers are preventing credit unions from fully supporting local entrepreneurs," says Jason Stverak, DCUC’s Chief Advocacy Officer. "By modernizing these restrictions, Congress and the Small Business Administration (SBA) could unlock billions in capital for small businesses—at no cost to taxpayers—while driving job creation and economic growth."

DCUC detailed several current barriers to small business lending, including arbitrary lending caps, limited access to SBA loan programs, and challenges in the SBA Preferred Lender Program (PLP).

Unlike banks, few credit unions have been granted "Preferred Lender" status, which allows for expedited loan approvals. Without this status, credit unions face lengthy SBA approval processes, leading to delays of up to two weeks—often too long for small businesses needing quick access to capital.

DCUC also noted how overly burdensome compliance requirements require credit unions, which typically have lean staffing compared to large banks, to navigate excessive regulatory and paperwork that makes SBA lending costly and time-consuming. “These challenges discourage many institutions from offering SBA loans, ultimately restricting access to credit for underserved small businesses,” says Stverak.

Stverak also added how, during the COVID-19 pandemic, credit unions played a vital role in delivering financial relief to small businesses through the Paycheck Protection Program (PPP). However, for every small business that received credit union support, many others were turned away due to arbitrary caps and regulatory obstacles.

DCUC’s letter to the Committee called for specific legislative and regulatory changes to expand credit union participation in small business lending, including: eliminating or raising the 12.25% Lending cap, expanding access to the SBA’s Preferred Lender Program (PLP), reducing regulatory burdens, and recognizing credit unions’ role in serving underserved communities.

"The economic benefits of these reforms are clear," Stverak says. "By lifting the lending cap and streamlining SBA participation, credit unions could inject billions into small businesses, create tens of thousands of jobs, and drive local economic growth—without taxpayer expense. We will continue to press this need and urge Congress to make these necessary reforms."

For more information, please contact Jason Stverak at [email protected] and visit dcuc.org/advocacy.