ABA’s 8 Recommendations for the SBA 7(a) Loan Program
March 4, 2025
Bob Coleman
Founder & Publisher
SBA Hot Topic Tuesday — ABA’s 8 Recommendations for the SBA 7(a) Loan Program
Last week, during a Senate Small Business hearing, Itzel Sims of First Security Bank, representing the American Bankers Association, offered eight recommendations to “maintain the financial stability of the 7A program.”
• SBA should reinstate the nine-factor lending criteria for underwriting 7(a) loans that had been in place prior to 2023.
• SBA should reinstate the nine-factor lending criteria for underwriting 7(a) loans that had been in place prior to 2023.
• SBA should focus on increasing the number of regulated banks that participate in the 7(a) Program instead of seeking new nonbank entrants to the Program.
• SBA should not grant any new small business lending company (SBLC) licenses unless and until the agency demonstrates there is a small business lending “desert,” the new SBLC is the institution best able to serve that specific geographic or socioeconomic gap, and SBA has the resources to oversee the new SBLC.
• SBA should reinstate the Loan Authorization, which was required prior to 2023, as a required document for 7(a) loans.
• SBA should reinstate the requirement, in place until January 2024, that 7(a) small business borrowers provide a 10% equity injection when the borrower is a startup (fewer than two years of business operations) or when the borrower is purchasing an existing business.
• SBA should reinstate the franchise directory, a valuable resource that assisted 7(a) lenders with determining the eligibility of a franchisee for a 7(a) loan before it was discontinued in 2023.
• Congress should repeal section 1071 of the Dodd-Frank Wall Street Reform and Consumer Protection Act to ensure small businesses have access to the capital they need to thrive.