The U.S. Senate advanced legislation that increases the Small Business Administration’s (SBA) oversight authority over the 7(a) small business lending program.
The bill — the Small Business 7(a) Lending Oversight Reform Act (H.R. 4743) – advanced the House in May and now moves to the president’s desk, where it is expected to be signed into law.
The bill is designed to strengthen SBA lending programs by codifying the SBA Office of Credit Risk Management and Lender Oversight Committee, increasing transparency in the office’s budget, and providing guidelines for lender reviews and lender appeals rights. It would also protect the 7(a) program from abuse by codifying the SBA’s “Credit Elsewhere Test,” which requires lenders to substantiate and document why a given applicant cannot be served with conventional credit. H.R. 4743 would also allow the SBA to lift the cap on general business loans by up to 15 percent if it is determined the cap will be reached.
The passage of the bill was applauded by the National Association of Federally-Insured Credit Unions (NAFCU).
“NAFCU and our member credit unions thank Senate Small Business and Entrepreneurship Committee Chairman [Jim] Risch (R-ID) and Committee Member [Jeanne] Shaheen (D-NH), and House Small Business Committee Chairman [Steve] Chabot (R-OH) and Ranking Member [Nydia] Velázquez (D-NY) for their bipartisan work to strengthen the SBA’s 7(a) loan program,” NAFCU President and CEO Dan Berger said. “This program is critical to credit unions’ ability to provide loans to small businesses and entrepreneurs in their communities, which is an integral part of the industry.”
Sonya McDonald, representing NAFCU, testified in favor of legislation at a recent hearing.
NAFCU has closely worked with the SBA to increase the number of credit unions offering SBA 7(a) loans. At NAFCU’s 2017 Congressional Caucus, Berger signed a new Memorandum of Understanding with McMahon aimed at improving access to credit union small-dollar loans to small businesses across the nation.
The Independent Community Bankers of America (ICBA) also supports the legislation.
“ICBA and the nation’s community bankers thank Congress 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,” ICBA President and CEO Rebeca Romero Rainey said. “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.”