April 17, 2023
Main Street Monday – Congress Displays Unease with New SBA Rules
Last week, the SBA announced two final rules to take effect in May. Some of the changes in the rules include lifting the SBLC moratorium, removing the Loan Authorization, streamlining the application process, and updating lending criteria.
Chairman Rogers of the House Committee responded to the published rules: “This final rule fails to take any of the concerns raised into account and didn’t make any material changes that would provide the necessary assurances that the SBA is putting the integrity of the program at risk. I hope we will be able to work in a bipartisan manner to stop this hastily crafted, flawed rule from moving forward so Congress can put the necessary guardrails on the program to increase access to capital for entrepreneurs without adding additional risk to the government backed loan portfolio.”
One of the concerns Chairman Rogers points out is that the office that oversees these entities has had a 30% reduction in staff since the start of the pandemic.
Though he still has some apprehension about the rule, the Chairman of the Senate Committee, Senator Cardin, expressed a more positive perspective: “While I have concerns with some of these changes, I know we have a shared commitment to filling gaps in capital markets for underserved communities. There is no question that improvements can be made to SBA’s lending programs to allow them to assist more businesses in these communities, and I look forward to working with Administrator Guzman and my colleagues on the Committee to ensure that the rules’ intended purpose is fulfilled.”
Not all of the Senate Committee is taking a favorable stance on the final rules. Senator Ernst, the Ranking Member, previously expressed that the rules have the potential to make SBA lending programs susceptible to fraud and predatory lending practices.
In a letter sent to the SBA in March, Chairman Cardin and Ranking Member Ernst wrote that the SBA should show “diligence and restraint” and ensure that the changes will not leave SBA lending programs vulnerable. Further, they wrote that “SBA should address these concerns before publishing final rules.”