State-chartered credit unions would have fewer restrictions under a bill that is the result of four weeks of negotiations among banks, credit unions and legislative leadership.

The compromise avoids a ballot-box initiative threatened by the credit unions, which wanted to overhaul credit-union law to level the playing field with banks.

SB296, sponsored by Sen. Curt Bramble, R-Provo, would change the amount of time a member has to belong to a credit union to obtain a business loan from six months to immediately after joining.

The measure also would allow the current $250,000 cap on business loans to increase with inflation, pegged to the Consumer Price Index, beginning May 5 and followed each year by an increase on Jan. 1.

The bill also increases the cap on personal loans from 1 percent to 4 percent of members' savings plus their retained earnings.

Members of the Utah Bankers Association and the Utah League of Credit Unions have promised Bramble, Senate President John Valentine, R-Orem, and House Speaker Greg Curtis, R-Sandy, to not return to the Legislature for law changes for at least five years, Bramble said.

"There were bank and credit union battles in 2003 and 2005," Bramble said. "Those were hotly contested, very acrimonious battles. Those would be what I call scorched-earth politics. This is unique in that both sides have been reasonable and willing to engage in constructive dialogue."

The dispute between the Utah Bankers Association and the Utah League of Credit Unions dates back 20 years. Banks have questioned the nonprofit status of large credit unions. Credit unions have said that state law excessively limits them and stifles healthy competition.

Utah League of Credit Unions president Scott Simpson said his group was "optimistic" about the compromise. "We're satisfied," he said.

Credit unions originally had asked for members to immediately qualify for business loans. The credit unions also wanted the $250,000 business loan cap to be lifted to something similar to the cap on federally chartered credit unions of 12 1/4 percent of a credit union's loan portfolio, and the personal loan cap be lifted to about 10 percent of a credit union's capital and surplus.

"I think we're still at a point where the state charter has some disadvantages, but the credit unions that choose to remain state chartered don't have to turn away loans that would otherwise go to a federal charter or another financial institution," Simpson said. "It's meaningful relief."

About 55 credit unions in Utah have state charters. Fifteen credit unions have abandoned their state charters for federal charters since 1999, when the last sweeping law change to state credit union charters occurred, Simpson said.

While the Utah Bankers Association does not support the changes for credit unions, it has promised as part of the compromise to not oppose the bill, association president Howard Headlee said.

"I think everyone knows the dispute centers on the actions of a few of the largest credit unions that are operating just like banks," Headlee said. "We have always been willing to work with those credit unions that remain true to their mission, and this year's no different."

The Utah Bankers Association wants Congress to address the bank-credit union dispute.

"It would be a waste of everyone's time to have a huge battle — whether it be an initiative or a battle with the Legislature — on this issue," he said.