The Independent Community Bankers of America (ICBA) commended the U.S. House of Representatives for advancing a bill it says will strengthen the 7(a) loan program of the Small Business Administration (SBA).
The House approved the Small Business 7(a) Lending Oversight Reform Act (H.R. 4743), which expands the reach of lending and credit services to a broader range of borrowers who would not qualify for a conventional loan. The SBA 7(a) loan program is used to provide startup costs for small businesses.
“The Small Business Administration’s 7(a) loan program allows community banks to use their unique underwriting skills to more effectively serve local small businesses,” ICBA President and CEO Rebeca Romero Rainey said. “ICBA and the nation’s community bankers thank the House for passing this much-needed bill to promote a robust and sustainable 7(a) program to help small businesses create jobs and strengthen our economy.”
The bill would allow the SBA to lift the cap on general business loans by up to 15 percent of the limit if it is determined the cap will be reached, as it was in 2015, which disrupted SBA lending and required ICBA-backed emergency legislation.
It would also increase the authority of the SBA’s Office of Credit Risk Management and Lender Oversight Committee over the program’s budget. In addition, it would provide guidelines for lender reviews and lender appeals rights. Further, it would codify the SBA’s “Credit Elsewhere Test,” which requires lenders to fully substantiate and document the reasons a given applicant cannot be served with conventional credit.