Community banks oppose proposed changes to SBAʻs loan program

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The Independent Community Bankers of America (ICBA) has voiced its opposition to proposed changes to the Small Business Administration’s 7(a) loan program.

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On Sept. 9, the U.S. House Small Business Committee approved a bill to deliver $25 billion in funding to invest in small business programs, including a provision that includes nearly $4.5 billion to fund a direct loan product under the current 7(a) lending program administered by the SBA.

ICBA President and CEO Rebeca Romero Rainey said her organization strongly opposes this particular proposal, as this would put the SBA in competition with community banks.

“As the nation’s leading small-business lenders, community banks are prolific 7(a) lenders, make up the majority of SBA lenders, and accounted for nearly 60 percent of Paycheck Protection Program loans,” Rainey said. “Establishing a direct lending program to compete with 7(a) private-sector experts would needlessly risk diminishing participation in the program while putting taxpayer dollars at risk. With a month left in fiscal 2021, the SBA has already guaranteed a record $30.1 billion in lending, with financing for the 7(a) program funded by user fees. Instead of expanding the SBA into direct lending, policymakers should update the 7(a) program’s federal credit subsidy rate to better reflect its low default rate and to help avoid disruptions to the program.”

Rainey said that ICBA will continue to work with policymakers to maximize the effectiveness of the 7(a) program for the small businesses they serve.

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