Like the sparrows’ return each spring to Capistrano, credit union lobbyists are flocking once again to Washington, to push for passage of legislation that would raise the cap on credit union-originated business lending.

Predictably, as it has in the past, the banking industry is rallying opposition, arguing there is no need for additional credit union commercial lending leeway. Banking industry associations note that Small Business Administration loans of up to $5 million, as well as small business loans of $50,000 or less, are already exempt from the credit union commercial lending cap.

Besides, the vast majority of credit unions are nowhere near the current cap of 12.5 percent of total assets. They claim increasing the cap to 27.5 percent would benefit only a handful of mega-credit unions.

And in a well-aimed swipe at the federal tax-exempt status of credit unions, the bankers claim that doubling the statutory lending cap is tantamount to subsidizing the credit union industry at the expense of American taxpayers.

The Credit Union National Association counters that more than 500 credit unions – the vast majority of them smaller institutions – will be bumping up against the cap in the next several years.

As for the attacks on credit unions’ federal tax-exempt status, CUNA rightly notes that bankers who demand taxation of credit unions have no qualms about advocating further tax relief for banks.

Instead of listening to the tired arguments from both sides, Congress should raise the arbitrary and outdated cap on credit union member business lending.

Small businesses have been hobbled by their inability to access credit. A recent report by the Progressive Policy Institute noted that firms with fewer than 50 workers provide as much as 30 percent of private sector employment. But because of their small size, they are much less likely to benefit from government small business loan programs. And they are less likely to win loans from big commercial banks.

Credit unions, which are cooperatively owned, nonprofit financial institutions, have already demonstrated their willingness to lend to small business. Between March 2010 and March 2011, credit unions’ member business lending increased 4.8 percent for a total of $35.6 billion, while bank business loans crept up only 1.4 percent over the same period, according to the National Association of Federal Credit Unions.

The legislation specifies that credit unions seeking to increase commercial lending limits would have to be well-capitalized; have at least five years’ of business lending experience; and be at or above 80 percent of the current 12.25 percent cap for at least a year prior to applying.

The credit union industry estimates that passage of the Small Business Lending Enhancement Act of 2011 (S. 509 and H.R. 1418) could result in $13 billion additional small business lending in the first year, generating as many as 140,000 new jobs.

Giving credit unions the ability to help underserved small businesses would empower them to better serve their memberships and their communities. And it could give the economy a needed boost.

If increasing the cap to 27.5 percent is too drastic, then a more reasonable cap should be negotiated.

But, like a long-overdue spring cleaning, it’s time for action. Congress should enact the Small Business Lending Enhancement Act.