The most a credit union may lend in commercial loans to one borrower or group of associated borrowers: the greater of 15 percent of its net worth or $100,000.
NCUA’s commercial lending rule sets the ceiling. Total commercial loans to one borrower or group of associated borrowers may not exceed the greater of 15 percent of the credit union’s net worth or $100,000. A further 10 percent of net worth is allowed when the amount over the first limit is fully secured by readily marketable collateral. Any portion backed by a federal or state agency program is left out of the count.
Example: a credit union with $40 million in net worth can lend $6 million to one borrower group, or up to $10 million if the last $4 million is fully secured by readily marketable collateral.
Associated borrowers are counted together. The rule looks at shared ownership, control and common enterprise, so two companies with the same owner usually share one limit.
A credit union under $250 million in assets whose commercial loans, counting those it has sold, total less than 15 percent of net worth is not bound by this section of the rule.
When a request is over the limit, the usual answer is a participation: the credit union keeps what it can hold and sells the rest. A buyer of a participation has the same limit on its own share.
How it shows up in the data here
Each credit union row carries net worth in dollars from the 5300, so 15 percent of it can be worked out by hand; this site does not publish a computed limit for credit unions. To size a request against lenders, filter credit unions by size and check net worth on the lender page. The bank counterpart is covered under the legal lending limit.
Go further
- Search credit unions: Every credit union row, with filters.
- Legal lending limit explained: How the bank limit works and how it compares.
- The legal lending limit, explained: A bank may not lend more than a set share of its capital to one borrower. The rule explains why a large loan gets shared, and why a lender can say a request is too big for it.
- How to place a business loan with a credit union: Credit unions make business loans, and some make a lot of them. Three things are different from a bank: the borrower must be a member, most credit unions work under a cap on business loans, and the limit to one borrower is set against net worth.
- Loan participations, explained: A participation lets one lender make a loan that is too large for it to hold alone. The borrower signs with one lender. Behind that lender, others own pieces of the loan and share its risk.
Related terms
- Legal lending limit: The most a bank may have outstanding to one borrower by law. For national banks it is 15 percent of capital and surplus, plus 10 percent more when the extra is fully secured by readily marketable collateral.
- Loans to one borrower: The total a bank counts against its lending limit for one borrower: loans, binding commitments and standby letters of credit, plus loans to related parties that the rules combine.
- Net worth ratio: A credit union's net worth divided by its total assets, as a percentage. NCUA treats 7 percent or more as well capitalized and 6 percent as adequately capitalized.
- Loan participation: A loan in which other lenders buy shares from the lender that made it, under a written agreement that keeps the first lender in the loan for its whole life.
- Member business loan (MBL): A credit union's business-purpose loan to one of its own members. The total of these loans is capped by federal law; loans to non-members are counted separately.
- Credit union: A member-owned cooperative lender. It lends to the people and businesses inside its field of membership and files a call report with NCUA every quarter.
Sources
- 12 CFR 723.4, Commercial loan policy (aggregate dollar amount to one borrower), retrieved .
- 12 CFR 723.2, Definitions (commercial loan, associated borrower), retrieved .
- 12 CFR 723.1, Purpose and scope, retrieved .
- 12 CFR 701.22, Loan participations, retrieved .
Plain definitions for orientation, not legal, tax or credit advice. A lender's own policy decides what it will do.