WASHINGTON—The Defense Credit Union Council (DCUC) is urging Congress to include legislation that would expand credit unions’ ability to make business loans to veterans in the fiscal year 2027 National Defense Authorization Act, arguing the measure would also help strengthen the nation’s military supply chains and defense industrial base.
In a letter to congressional leaders, DCUC called for inclusion of the bipartisan Veterans Member Business Loan Act (H.R. 507/S. 110), which would exempt qualifying loans to veterans from the statutory cap on credit union member business lending.
The trade group said the legislation would improve access to financing for veteran-owned small businesses without creating a new federal lending program or requiring additional taxpayer funding.
Letter Sent to Congressional Leaders
According to DCUC, its letter was directed to the chairs and ranking members of the House Financial Services, Senate Banking, House Armed Services and Senate Armed Services committees, urging them to work together to secure the legislation’s inclusion in the final NDAA.
“H.R. 507 and S. 110 offer a targeted solution by excluding qualifying extensions of credit made to veterans from the statutory member business loan definition,” DCUC stated in its letter. “The legislation creates no new federal lending program, appropriates no new loan funds, and provides no new government guarantee.”
The organization emphasized that credit unions would remain responsible for underwriting, capital, liquidity and safe lending practices.
“We are asking Congress to remove a barrier, not remove responsibility,” the letter stated.
Connecting Veteran Businesses to Military Readiness
DCUC President and CEO Anthony Hernandez, a retired U.S. Air Force colonel, said expanding financing opportunities for veteran entrepreneurs would also support national defense priorities.
“A strong military needs a strong industrial base behind it, and veteran-owned small businesses should have every opportunity to help build it,” Hernandez said.
“We have an opportunity to support veteran entrepreneurs through a policy that helps them buy equipment, hire workers, and compete for the business while also keeping our military supplied and ready.”
DCUC pointed to the Small Business Administration’s Smaller War Plants Commission, which is focused on expanding small-business participation in defense production and improving access to capital.
According to the SBA, small businesses account for more than 70% of the nation’s defense industrial base.
The commission has identified several areas of emphasis, including:
- Manufacturing and industrial production.
- Electronics and related technologies.
- Battery production.
- Naval shipbuilding.
- Repair components and related supply chains.
DCUC argued that improving access to business financing could help veteran-owned companies participate in those industries, expand production capacity and compete for defense contracts.
Current Lending Cap Cited as Barrier
Under current federal law, credit unions subject to the statutory member business lending cap generally cannot have aggregate member business loans exceeding 12.25% of total assets. A lower limit may apply depending on a credit union’s net worth.
DCUC said the restriction can prevent credit unions from approving otherwise sound business loans, even when borrowers have viable business plans and lenders are willing to provide financing.
The Veterans Member Business Loan Act would remove qualifying loans to veterans from the calculation of that limit, potentially allowing credit unions to provide additional financing without exceeding the statutory ceiling.
The organization stressed that the proposed exemption would not eliminate existing safety and soundness requirements.
‘A Contracting Opportunity Does Not Buy a Milling Machine’
Jason Stverak, DCUC’s chief advocacy officer, said Congress should recognize the connection between supporting domestic defense production and ensuring businesses have access to financing.
“Washington cannot ask veterans to help rebuild America’s defense industrial base while leaving an unnecessary barrier between them and the capital needed to do the job,” Stverak said in a statement. “A contracting opportunity does not buy a milling machine. A statement of support does not cover payroll. Congress needs to connect its support for American production with responsible financing that helps businesses actually produce.”
DCUC said incorporating the legislation into the NDAA would provide Congress an opportunity to address two priorities simultaneously: expanding economic opportunities for veterans and strengthening the domestic businesses that support military readiness.
The organization characterized the proposal as a targeted change to existing credit union lending restrictions rather than an expansion of federal spending or government-backed lending programs.
