Small Business Administration Programs

 Updated July, 2010

NAFCU believes it is important for all federally insured credit unions to have the ability to participate in any and all beneficial loan programs of the Small Business Administration (SBA). In February 2003, after working with NAFCU, former SBA Administrator Hector Barreto made all credit unions eligible to participate in the 7(a) loan program.

NAFCU recently urged Congress and the SBA to extend through 2010 a fee wavier for SBA-backed loan programs, including those provided under the 7(a) and 504 programs, and extend the 90% guarantee on SBA loans (established as part of the American Recovery and Reinvestment Act in 2009).   The wavier, last extended in April, is set to expire at the end of May 2010.  

At a time when our country is just beginning its economic recovery, NAFCU believes it is critical that these programs are extended so that small businesses are encouraged to take full advantage of loan opportunities available through the SBA.  Such a provision was part of the recently-passed House jobs bill and is likely to be included in a Senate jobs package.

In the 110th Congress NAFCU worked with Rep. Nydia Velazquez (D-NY), the Chairwoman of the House Small Business Committee, to expand credit union participation in SBA programs.  Under Chairwoman Velazquez’s leadership, the Small Business Committee has prioritized increasing participation in SBA programs, and on March 29, 2007, Chairwoman Velazquez introduced the Credit Union Small Business Lending Act (H.R. 1849).  The proposal, aimed at improving the ability of credit unions to participate in SBA programs, contained four key provisions:

·                     Revising regulatory treatment of SBA loans to permit the guaranteed and non-guaranteed components of SBA 7(a) loans to be excluded from the arbitrary credit union business lending cap.  This would provide credit unions with the ability to better meet business loan demand of their members.

·                     Establishing a credit union outreach program within the SBA.  The SBA would be required to report annually to Congress regarding its efforts to increase credit union participation in the 7(a) program and generate a simplified application process for credit union participation.  This initiative would assist credit unions in increasing involvement in the 7(a) program and make the process more manageable.

·                     Establishing a program to provide an 85 percent guaranty on member business loans up to $250,000 for loans made to small businesses in underserved areas, as defined by the Community Development Banking and Financial Institutions Act of 1994 or by the New Market Tax Credit program.

·                     Clarification of existing law which permits credit unions to participate in the SBA’s 504 Certified Development Companies loan program.  Credit Unions risk non-compliance with NCUA lending rules without clarification because the terms of SBA’s 504 loan program are specified in regulation and not in statute. 

Ultimately, no action was taken on H.R. 1849 in the 110th Congress.   NAFCU continues to support these measures and is working to have them addresses in the111th Congress.