The Credit Union National Association (CUNA) is offering support to a measure the organization said would prevent direct Small Business Administration (SBA) 7(a) loan program lending.
The CUNA noted H.R. 6307 was introduced by Rep. Blaine Luetkemeyer (R-MO) and forwarded correspondence detailing the bill’s benefits. Loans made via the 7(a) program are guaranteed by the federal government by up to 85 percent, with the loan’s government-guaranteed portion not counted against a credit union’s member business lending cap.
“This public private partnership works as borrowers can obtain loans from financial institutions that they know well and that have vested interests in their borrowers’ success,” the CUNA wrote. “Furthermore, when working with local lenders, small businesses are likely to benefit from guidance and experience from a lender with a stake in helping the borrowing business succeed.”
The CUNA indicated the organization has also shared concerns with the House Small Business Committee regarding the matter while urging Small Business Administration (SBA) direct lending language be omitted from reconciliation legislation.
“By becoming a direct lender to small businesses, the SBA is likely to harm local financial institutions’ relationships with businesses and possibly hamper these businesses from establishing important banking relationships that can only help their business survive and flourish,” the CUNA concluded in its correspondence.