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Senate Republicans express concerns with SBA direct lending
A group of 15 Senate Republicans joined together last week to send a letter to Senate Majority Leader Chuck Schumer, D -N.Y., House Speaker Nancy Pelosi, D-Calif.., and the Senate and House Small Business Committee Chairs, Ben Cardin, D-Md., and Nydia Velasquez, D-N.Y., respectively, to express concerns against a proposal included in the Build Back Better Act granting the Small Business Administration (SBA) direct-lending abilities. Under the provisions, the SBA could generate and distribute 7(a) loans of $150,000 or less, directly to borrowers or “through partnerships with third parties.”
The Republicans expressed their opposition to the proposal noting to Congressional leadership that "the program would be an inefficient, costly, and unequitable position to but both lender and borrowers."
"Aiming to get more 7(a) loans in the hands of the smallest of small businesses by providing the SBA $4.5 billion to run its own lending program is misplaced," wrote the group of Senators. “We encourage you to take lessons from the past year and see that the way to increase availability of these products to those that do not have access is not by simply having government play a larger role, but instead to empower financial institutions to do what they do best."
In addition, earlier this month, House Small Business Committee Republicans led by Ranking Member Blaine Luetkemeyer, R-Mo., sent a letter to Speaker Pelosi and House Minority Leader McCarthy to detail their concerns regarding the proposal.
NAFCU continues to voice its concerns against the proposal, noting specifically that the provision would not require the SBA to work with lenders as they do with other 7(a) loan products, and would inherently allow them to make these new loans on their own.
The association remains steadfast to ensure this provision is excluded from the budget reconciliation proposal. NAFCU will continue to engage Congress to advocate against provisions that would further complicate the direct lending process.
Stay tuned to NAFCU Today for updates on this issue.