With the new final rules going into effect in May, the Senate Small Business Committee held a hearing Wednesday at 3:30 E.T. to discuss how the SBA will administer these rules. The witness panel consisted of Associate Administrator Patrick Kelley from the Office of Capital Access and Deputy Inspector General Sheldon Shoemaker from the SBA OIG.
SBLC Expansion
Associate Administrator Kelley declares in his prepared testimony that the SBA will start by issuing three SBLC licenses to lenders that have “demonstrated historical performance of safety and soundness, and a strong regard for borrower financial health and protection.”
Identifying concerns, Deputy Inspector General Shoemakers prepared key risk considerations of the SBLC expansion in his prepared testimony. He cites the following concerns:
- Risk of default
- Risk of loss through increased maximum loan amounts
- Risk of insufficient oversight and monitoring
- Risk of other than small businesses accessing credit programs
Affiliation Rule
Easier access and less complex rules will welcome more community banks, credit unions, nonprofits, and other lenders to participate according to Kelley’s testimony. Lenders can now make loan decisions based on their existing best practices, and the rule provides more flexibility for small loans under $150,000. Streamlining affiliation standards will minimize the paperwork burden for small businesses and simplify the process for lenders.
Criminal History Records Rule
Patrick Kelley writes that while individuals with non-felony convictions are eligible for most SBA programs, SBA is exploring further options to expand access to capital for justice-impacted individuals. By standardizing eligibility rules across SBA programs, qualified entrepreneurs should not receive loan denials due to previous involvement in the criminal justice system.
The implementation of the final rules will be examined further during the hearing
Listen to the hearing scheduled for Wednesday, April 25 at 3:30 p.m.
Source:
Associate Administrator Kelley’s Testimony
Deputy Inspector General Shoemaker’s Testimony
About the U.S. Small Business Administration
The U.S. Small Business Administration makes the American dream of business ownership a reality. As the only go-to resource and voice for small businesses backed by the strength of the Federal Government, the SBA empowers entrepreneurs and small business owners with the resources and support they need to start, grow or expand their businesses, or recover from a declared disaster. It delivers services through an extensive network of SBA field offices and partnerships with public and private organizations. To learn more, visit www.sba.gov.
