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| NAFCU Letter Underscores Major Concerns with SBA Direct Lending |
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NAFCU President and CEO Dan Berger wrote to the Small Business Administration (SBA) Thursday to reiterate concerns regarding provisions currently included in the Build Back Better Act (BBBA) that grant the SBA new direct-lending abilities.
Under the provisions in the bill, the SBA could make 7(a) loans of $150,000 or less directly to borrowers or “through partnerships with third parties.”
Berger highlighted results from NAFCU's 2021 Federal Reserve Meeting Survey that revealed NAFCU-member credit unions have an increased interest in SBA lending programs and the expected demand in small business lending. Therefore, Berger noted, the SBA should continue to strengthen and expand its credit union partner base instead of diverting resources toward a new, potentially risky direct lending program.
Additionally, Berger outlined several questions for the SBA regarding its authority to make direct loans and respectfully called on the SBA to respond. These questions requested:
• Reasons behind the SBA’s decision to cease the direct lending program in 1998;
• Data that demonstrates community financial institutions are unable or unwilling to provide loans under $150,000, necessitating a direct lending program;
• Proof of enough staff and resources to implement an effective and efficient direct loan program given the level of appropriations in the BBB Act;
• Internal controls to mitigate the risk of fraud; and more.
NAFCU appreciates the partnership with the SBA as the number of credit unions participating in SBA lending has continued to increase over the past few years," concluded Berger. "However, credit unions are very concerned about the long-term impacts a direct lending program may have on their ability to provide business loans under $150,000, and their participation in SBA loan programs in the future."
NAFCU’s advocacy team remains steadfast to ensure this provision is excluded from the budget reconciliation proposal. The association will continue to engage Congress to advocate against provisions that would further complicate the direct lending process.
Copyright 2021. NAFCU. (link) |
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