Small community lenders may have been issued a reprieve with a new ruling on size standards.
The Small Business Administration (SBA) issued a final rule increasing small business size standards for several industries, including credit unions, with unanimous support from members of the Credit Union National Association (CUNA). The rule increases the size standard from $175 million in assets to $500 million.
Over the years, SBA has received comments that its size standards have not kept up with changes in the economy, and, in particular with changes in the federal contracting marketplace and industry structure.
CUNA, representing 90% of state and federal credit unions in the U.S., is in strong support of SBA’s decision to increase the size standard, commenting that it’s a way to enable more community banks to benefit from provisions that require federal agencies to assess and minimize regulatory costs on small entities under the Regulatory Flexibility Act and the Small Business Regulatory Enforcement and Flexibility Act. The comment noted that institutions below $500 million in assets lack the necessary personnel such as a full-time compliance officer to meet the compliance requirements.
In addition, the CFPB uses SBA size standards to identify small banks eligible to serve as “small entity representatives” during the review process, and CUNA said the change will allow more community banks to participate.