Member businesses with fleets of two cars are no longer considered fleets by new credit union standards. The National Credit Union Administration modified Tuesday what it defines as a fleet of vehicles, upping the necessary number of cars for "fleet" classification to five or more vehicles from two or more.

“The current definition of a business fleet — two or more vehicles — is no longer adequate to meet members’ needs,” NCUA Board Chairman Debbie Matz said in a press release yesterday. “So, at the request of a credit union, NCUA’s general counsel reviewed the definition and issued a new legal opinion that both reflects the realities of today’s marketplace and protects safety and soundness.”

This new ruling requires that all member business loans meet certain collateral and security requirements, and permits credit unions to make business car loans that do not comply with an 80% loan-to-value requirement unless they are fleet vehicles.

The reasoning for the LTV requirement is that fleets present a higher lending risk to credit unions because those vehicles often depreciate faster than personal-use cars.

With the NCUA changing fleet classification, credit unions can be more flexible in their lending decisions. Member businesses with fewer than five cars will qualify for the loan-to-value exception.

In addition, the NCUA stated that this legal opinion is uniform with the way fleet vehicles are seen by the Internal Revenue Service and auto-industry standards.