Community banks oppose proposed changes to SBA loan program
The Independent Community Bankers of America (ICBA) has expressed its opposition to proposed changes to the Small Business Administration’s 7 (a) loan program.
On September 9, the US House Small Business Committee approved a bill providing $ 25 billion in funding to invest in programs for small businesses, including a provision that includes nearly $ 4.5 billion to fund a direct loan product under the current 7 (a) loan program. administered by the SBA.
ICBA President and CEO Rebeca Romero Rainey said her organization strongly opposes this particular proposal because it would put the SBA in competition with community banks.
“As the country’s leading small business lenders, community banks are 7 (a) prolific lenders, make up the majority of SBA lenders, and account for almost 60% of Paycheck Protection Program loans,” said Rainey. “Setting up a direct lending program to compete with private sector experts 7 (a) would unnecessarily risk reducing program participation while putting taxpayer dollars at risk. With one month remaining in fiscal 2021, the SBA has already guaranteed a record $ 30.1 billion in loans, with program funding for the 7 (a) funded by user fees. Instead of extending the SBA to direct loans, policymakers should update the Federal Program 7 (a) credit subsidy rate to better reflect its low default rate and to help avoid disruption to the program. “
Rainey said ICBA will continue to work with policymakers to maximize the effectiveness of the 7 (a) program for the small businesses they serve.