WASHINGTON—A bill has been introduced in Congress that would prevent the Small Business Administration (SBA) from making direct loans under the 7(a) loan program.
A provision that gives the SBA such authority and which is strongly opposed by credit unions has been included in the just-passed Build Back Better Act (BBBA).
The legislation that would prohibit the SBA from making direct loans was introduced by Rep. Blaine Luetkemeyer (R-MO).
Under the proposal in the BBBA, the SBA would be granted explicit authority to originate and distribute loans to small businesses.
“NAFCU thanks Representative Luetkemeyer for introducing necessary legislation to prohibit the SBA from originating and distributing loans to small businesses, stopping a provision included in the budget reconciliation legislation that grants the SBA explicit direct lending authority,” said NAFCU Senior Vice President of Government Affairs Greg Mesack. “Among other concerns, we fear this proposal could sever the relationships between small businesses and the community financial institutions they’ve trusted for years.
“Unfortunately, with the SBA direct lending program’s inclusion in the House-passed Build Back Better Act, there is more work to be done,” Mesack continued. “While we understand the need for increased small business lending, there are better ways to address this issue, including strengthening the way existing lenders provide access to capital. We are committed to working with Ranking Member Luetkemeyer to pass this bill and ensure small businesses receive the support needed to be successful.”
Bill Would Create OIG at CFPB
In addition, NAFCU said its VP of legislative affairs, Brad Thaler sent a letter to Luetkemeyer reiterating support for the bill and sharing similar concerns on how the “government does not belong in the business of making loans, and historically has been unsuccessful at lending.”
NAFCU noted Luetkemeyer also announced the introduction of a new bill to create an office of the inspector general at the Consumer Financial Protection Bureau (CFPB). Thaler wrote a separate letter to Luetkemeyer supporting the legislation, which can be found here.
CU Supporter in Congress to Retire
Separately, a member of Congress who has been a strong supporter of credit unions has announced he will not run for re-election.
Rep. G.K. Butterfield (D-NC) announced he will not seek a tenth term in 2022. Butterfield has represented North Carolina’s 1st Congressional District since 2004 and has been supported by credit unions since his initial primary election, CUNA noted.
“Rep. Butterfield strongly supported credit union efforts to get much needed capital to members and businesses hit hard by the pandemic, and he’s been a champion for credit unions during his tenure in Congress,” said CUNA President/CEO Jim Nussle. “We congratulate Rep. Butterfield on his retirement and send our best wishes to him and his family.”
Butterfield was one of several members of Congress who praised credit union efforts to support small businesses during the onset of the COVID-19 pandemic and supported the $60 billion set aside for community-based financial institutions in the second round of the Paycheck Protection Program, CUNA noted.