Hirono, colleagues introduce bipartisan legislation to support veteran-owned small businesses

US Sen. Mazie Hirono has joined fellow lawmakers in introducing the Veterans Member Business Loan Act, a bipartisan and bicameral bill aimed at exempting US veterans from the government-imposed lending cap, a federal limit restricting how much credit unions can lend to small businesses.

According to America’s Credit Unions, the current member business lending cap was imposed by Congress in the Credit Union Membership Access Act of 1998. This arbitrary cap limits most credit unions to lending no more than 12.25 percent of their assets to small businesses.

“Veteran businesses play a significant role in the economy in Hawaiʻi and across the country,” Hirono said. “By promoting commercial lending for these businesses through credit unions, the Veterans Member Business Loan Act will give businesses increased access to capital, helping them to grow and expand while supporting the community.”

A study from the US Small Business Administration’s Office of Advocacy found that military service is strongly correlated with a higher probability of self-employment, with veterans being 45 percent more likely than non-veterans to be self-employed.  But according to the Institute of Veteran Military Families, “accessing capital is a top challenge in starting and growing a business for 75 percent of surveyed veterans.”

While veteran and non-veteran owned businesses request financing and capital at almost identical rates, veterans obtain less money than non-veterans. Additionally, veteran-owned businesses also apply for financing at higher rates than non-veteran owned businesses. Yet, veterans see lower approval rates across the top three sources of credit by 10 percent compared with non-veterans.  

The Veterans Member Business Loan Act aims to allow an additional source of capital to ensure veteran entrepreneurs are set up for success.

Hirono, a member of the Senate Committee on Small Business and Entrepreneurship, introduced the bill alongside US Sen. Dan Sullivan (R-AK) and US Reps. Vicente Gonzalez (D-TX) and Brian Fitzpatrick (R-PA). The House version of the bill includes US Rep. Jill Tokuda (HI-02) as an original co-sponsor.

The full text of the legislation is available here.