The federal agency that regulates credit unions is proposing rule changes that would make it easier for them to provide loans to member businesses.

The National Credit Union Administration is pushing for a loosening of commercial lending rules that it says would give credit unions more flexibility and greater autonomy.

Economic analysis of the proposed rule change shows it would boost small-business lending in Maine by at least $65 million and create 700 new jobs, according to John Murphy, president of the Maine Credit Union League.

Under the proposed changes, existing requirements for collateral, security, equity and loan limits would be replaced with “a broad principles-based regulatory approach,” according to the proposal, published Wednesday in the Federal Register.

“They’re looking at the reality of the marketplace … and the fact that credit unions have money to lend,” Murphy said.

The new approach would eschew hard-and-fast requirements and restrictions in favor of more general principles and guidelines. The association said the proposed rule change is consistent with its mission of “regulatory modernization, including modifying, streamlining, refining or repealing outdated regulations.”

Murphy said credit unions have been pushing for years to loosen tight restrictions on the amount of money they can lend to businesses, a change the banking industry strongly opposes.

The proposal is subject to a 60-day public comment period. It can be viewed and commented on by visiting regulations.gov and typing “Part 723” into the search box. The administration’s board of directors then will decide whether to pass the proposed rule changes. It also can amend them in response to public feedback.

‘CLASS B’ OFFICE MARKET LAGS

Owners of prime multi-tenant commercial properties in downtown Portland have seen a spike in demand for office space, but it has come at the expense of landlords of less-desirable buildings in the city, according to associate broker Nate Stevens of CBRE/The Boulos Co. in Portland.

Two of the three biggest downtown commercial lease deals signed so far this year involved tenants moving from so-called “Class B” properties to “Class A” office space. The trend is expected to continue, Stevens said in a market update report.

At the end of 2014, the vacancy rate for Class A office space in downtown Portland was 8.8 percent, according to Boulos. Stevens said it is expected to drop below 5 percent by the end of this year.

Meanwhile, the vacancy rate for Class B space is not expected to decrease, he said. It was 11.1 percent at the end of 2014, up from 9.4 percent a year earlier.

RURAL RESOURCES

A rural community development financial institution that was launched in Bethel in 1995 celebrated its 20th anniversary last week with a four-day conference in Portland.

The Local Initiatives Support Corp.’s Rural LISC organization is designed to help rural communities by helping to expand investment in housing, stimulate economic growth, improve access to education and promote better lifestyles for rural residents.

LISC was created by the Ford Foundation in 1979 with the goal of revitalizing American cities suffering from economic and social decline. It formed Rural LISC 16 years later to serve the same function in rural areas.

With help from partner organizations in 43 states, including Coastal Enterprises Inc. in Maine, Rural LISC has facilitated $220 million in grants and loans, and another $850 million in equity and bridge financing. Through loans and loan guarantees offered by organizations such as CEI, it has spurred more than $3 billion of investment in rural development over its 20-year lifespan.

LISC’s relationship with CEI extends back to the 1980s, when it helped finance the Penobscot Bay Fish and Cold Storage cooperative on Vinalhaven and helped CEI use federal tax credits to finance small businesses in the Portland, Lewiston and midcoast area of Maine.

Last week’s conference included workshops and panel discussions covering a wide range of topics including how to develop a housing project, using arts and culture to grow a rural community’s economy, and how to apply for LISC grants.

Rural areas have been recovering much more slowly from the Great Recession of 2007-2009 than their urban counterparts, according to the U.S. Department of Agriculture’s Economic Research Service.

Rural job growth has been nearly flat since 2011, it said, and rural labor force participation has remained about 3 percentage points below that of urban areas. About 17 percent of the U.S. population lives in rural areas, according to the USDA.

 


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