When it comes to commercial loans, what is the limit the credit unions must maintain according to NCUA?

In the context of commercial loans regulated by the National Credit Union Administration (NCUA), the requirement that credit unions must maintain a limit of 1.75 times the minimum net worth required under the Federal Credit Union Act is a critical guideline for ensuring financial stability and sound lending practices.

This specific limit reflects NCUA's intent to mitigate risk associated with commercial lending by requiring credit unions to hold a sufficient capital buffer. Maintaining a capital ratio of 1.75 times the minimum net worth acts as a safeguard against potential losses that may arise from commercial loan defaults, promoting the overall health of the credit union and protecting member deposits.

By setting this standard, the NCUA ensures that credit unions do not overextend themselves in commercial lending without adequate capital. This helps to maintain the integrity of the credit union system and ensures that these institutions can absorb any losses, continuing to serve their members effectively.

The other options do not align with NCUA’s specified guidelines for commercial loan limits, as they either reference incorrect multiples or considerations of net worth and liabilities that are not in accordance with regulatory requirements.