Senate bill would prevent SBA from becoming a direct lender | 2021-12-14

Sen. Tim Scott on Tuesday introduced a bill to prevent the Small Business Administration from becoming a direct lender, the Protecting Access to Credit for Small Businesses Act (S. 3382). The bill would prevent the SBA from directly issuing loans under the 7(a) program.

“We support all efforts to prevent the SBA from becoming a direct lender and thank Senator Scott for this legislation,” said CUNA President and CEO Jim Nussle. “The current public-private partnership between lenders and the SBA benefits everyone involved, helping to foster relationships between businesses and their community. Transforming the SBA into a direct lender would negatively affect those relationships and disrupt the current system at a time when small businesses need access to capital more than ever.

CUNA wrote to Scott on Tuesday in support of the bill, noting that the SBA’s government-guaranteed loan programs epitomize a successful public-private partnership.

“This public-private partnership works because borrowers can get loans from financial institutions they know well and who have a vested interest in the success of their borrowers. Additionally, when working with local lenders, small businesses are likely to benefit from the advice and experience of a lender with the goal of helping the borrowing business succeed,” the letter states. “By becoming a direct lender to small businesses, the SBA has the potential to harm local financial institutions’ relationships with businesses and potentially prevent those businesses from building important banking relationships that can only help them survive and thrive. .

CUNA also supports a similar bill introduced in the House by Rep. Blaine Luetkemeyer (R-Mo.).